Walker v Gibbston Water Services Ltd - [2014] NZHC 494

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-002834 [2014] NZHC 494

UNDER the Companies Act 1993

IN THE MATTER of GIBBSTON WATER HOLDINGS LIMITED (In Liquidation)

BETWEEN ROBERT BRUCE WALKER as liquidator of GIBBSTON WATER HOLDINGS LIMITED
Applicant

ANDGIBBSTON WATER SERVICES LIMITED
First Respondent

ANDCASTLEREAGH PROPERTIES LIMITED
Second Respondent

ANDKRISTINA LOUISE BUXTON Third Respondent

ANDCANTERBURY LEGAL SERVICES LIMITED
Fourth Respondent

Hearing: 13 March 2014 (By way of telephone conference) Appearances: K Sullivan for Applicant
J Moss for Respondents

Judgment: 18 March 2014

JUDGMENT OF DUNNINGHAM J

WALKER v GIBBSTON WATER SERVICES LIMITED AND ORS [2014] NZHC 494 [18 March 2014]

Introduction

[1] This is an application for review of the judgment of Associate Judge Osborne dated 28 February 2014 declining an application by the respondents for discovery in this proceeding.1

[2] The applicants for review, being the four respondents in the substantive proceeding (and whom I will refer to, for convenience, as the applicants), applied for orders for discovery on 20 December 2013. The orders for discovery still being pursued in this hearing relate to communications and documents between Mr Robert Bruce Walker, who is the liquidator of Gibbston Water Holdings Limited (“the liquidator”), and various other named parties. The applicants do not pursue their application for discovery of documents from Mr Denis Marshall.

Background

[3] It is unnecessary to traverse the full history of this matter for the purposes of this judgment. It is sufficient to say that Mr Walker was appointed as liquidator of Gibbston Water Holdings Limited (GWHL) on 10 October 2011, on the resolution of the receivers of the sole shareholder in GWHL, RFD Investments Limited (in receivership and liquidation).

[4] GWHL, in turn, is the sole shareholder in Gibbston Water Services Limited (GWSL) a company which owns rights to abstract water in the Gibbston Valley area for supply to a number of properties in the valley.

[5] On 24 August 2011, the sole director of GWHL, the third respondent Ms Buxton, purported to transfer GWHL’s entire shareholding in GWSL to the second respondent, Castlereagh Properties Limited, for consideration of $1.00.

[6] The liquidator considered the purported transfer of shares was an “interested transaction” pursuant to s 139 of the Companies Act and that he was entitled to give
notice of avoidance under s 141. He did so on 19 October 2011. On

1 Walker v Gibbston Water Services Ltd [2014] NZHC 330.

23 December 2011 the liquidator appointed Denis William Anson Marshall as sole director of GWSL.

[7] Both those steps, and others, were contested by the applicants, so the liquidator has applied, under s 284 of the Companies Act 1993, for orders or directions confirming those decisions.

The Associate Judge’s decision

[8] On 28 February 2014, Associate Judge Osborne issued his decision on the application for discovery. He began by setting out the background to the application.

[9] The application sought discovery in the context of an originating application by the liquidator under s 284 of the Companies Act 1993 for…

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: [2014] NZHC 494
Decision Date: 18 March 2014

CaseChat Overview and Summary

The application for review by the applicants, who are also the respondents in the substantive proceeding, was made against the decision of the Associate Judge declining an application for discovery by the applicants. The applicants sought orders for discovery relating to communications and documents between Mr Robert Bruce Walker, the liquidator of Gibbston Water Holdings Limited, and various other named parties. The applicants argued that the discovery was relevant to the issues in the proceeding, including the liquidator's conduct and the validity of the orders he sought. The Associate Judge declined the application for discovery on the basis that the documents were not relevant to the issues in the proceeding and did not meet the test for proportionality. The applicants sought a review of that decision on the basis of various alleged errors by the Associate Judge.

The court considered the arguments made by the applicants and the liquidator. The court found that the Associate Judge's decision not to accept the informal application under s 284 of the Companies Act 1993 was correct. The applicants needed to satisfy the Court that they fell within the classes of persons who were entitled to seek leave under s 284 of the Companies Act. The court also found that the applicants had not demonstrated that the documents requested were relevant to the issues in the proceeding, and that the requirement of proportionality of discovery under r 8.2 of the High Court Rules would not be met if an order was granted for the wide-ranging discovery sought by the applicants.

The application for review of the Associate Judge’s decision dated 28 February 2014 to decline the orders sought for discovery is dismissed. The liquidator is directed to file a memorandum on costs within 14 days of this judgment, and any memorandum in opposition to an award of costs is to be filed within a further 14 days of receipt of the memorandum seeking costs.

Orders