Tietjens v Quigley - [2015] NZHC 3276

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-003339 [2015] NZHC 3276

UNDER
Part 19 of the High Court Rules and the

Companies Act 1993

IN THE MATTER

of the liquidation of Quigley's Technical
Services Ltd

BETWEEN

STEPHEN REX TIETJENS AND PETER CHARLES CHATFIELD

Applicants

AND

STUART GARY QUIGLEY AND KATRINA MARY QUIGLEY Respondents

Hearing: 2 July 2015

Appearances:

D R Bigio for Applicants
W C Pyke for Respondents

Judgment:

18 December 2015

JUDGMENT OF HINTON J

This judgment is delivered by me on 18 December 2015 at 3.00pm pursuant to r 11.5 of the High Court Rules.

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

Solicitors:
Grove Darlow & Partners, Auckland
B O Bluett, Hamilton

Counsel:
D R Bigio, Barrister, Auckland

TIETJENS AND ANOR v QUIGLEY AND ANOR [2015] NZHC 3276 [18 December 2015]

Introduction

[1] Stephen Tietjens and Peter Chatfield are the liquidators of Quigley’s Technical Services Limited (“QT”). They have applied, by way of originating application, for various orders against Mr and Mrs Quigley, the shareholders and directors of QT.

[2] Mr and Mrs Quigley filed an interlocutory application to debar Grove Darlow (solicitors for the liquidators) from acting on the originating application and for an order requiring the liquidators to produce an affidavit of documents as to the funding arrangements between Grove Darlow and the liquidators.

[3] This judgment relates only to the application to debar Grove Darlow.

Background

[4] Most of the background is only indirectly relevant, but for its indirect relevance, I set it out. It is an unusual story.

[5] QT was incorporated on 5 October 1992. It was a small family building business.

[6] In 2005, QT provided building services to a company called Mariteq

Fabricators Limited (“Mariteq”).

[7] On 18 December 2006, QT issued proceedings in the District Court against

Mariteq, claiming a balance due in respect of the building services. On 16 March

2010, judgment was entered in favour of QT in the sum of $32,973.75. Mariteq did not pay the judgment debt and later failed to comply with a statutory demand made against it. In May 2010, QT commenced liquidation proceedings against Mariteq.

[8] When the liquidation proceeding brought by QT was pending, Mariteq, represented by Grove Darlow, proposed a compromise to its creditors. Despite QT’s objection, the requisite majority of creditors approved the compromise at a meeting of creditors on 11 November 2010. QT challenged the compromise, alleging it was

unfairly prejudicial and that it contained material irregularities. QT issued proceedings in which it sought a declaration under s 232(3) of the Companies Act
1993 that it was not bound by the compromise. Mariteq and QT agreed that an independent accountant would be appointed to report on whether QT would receive a greater dividend through liquidation or under the compromise. The parties agreed to be bound by the outcome of the accountant’s report and the firm of McDonald Vague was selected. A deed was entered into to this effect on 5 December 2011.

[9] Subsequently, Mariteq alleged that Mr Booth…

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.

Continue reading Tietjens v Quigley

Details

AGLC: Tietjens v Quigley [2015] NZHC 3276
Case: [2015] NZHC 3276
Decision Date: 18 December 2015

CaseChat Overview and Summary

The matter involved an application to debar Grove Darlow, a law firm, from acting for the liquidators of Quigley’s Technical Services Limited (QT) in proceedings against the Quigleys, the shareholders and directors of QT. The Quigleys applied to debar Grove Darlow on the basis that it was a material creditor of QT and was therefore conflicted in acting for the liquidators. The Court was required to decide whether Grove Darlow’s interest in the outcome of the liquidation proceedings and the originating application was sufficiently aligned with the liquidators’ duty to act impartially so as to avoid a conflict of interest. The Court found that there was a conflict of interest because Grove Darlow’s interest in the recovery of its debt did not correspond in all respects with the liquidators’ obligation to act impartially. As a result, the Court ordered that Grove Darlow be debarred from acting in the proceedings. The debarring order was made only in respect of the originating application but the Court made clear that the decision had broader implications for the conduct of the liquidation.

Orders