West v Grant - [2013] NZHC 3043

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-929 [2013] NZHC 3043

IN THE MATTER of the Companies Act 1993

AND IN THE MATTER of the liquidation of Meadowlane Limited
(in liquidation)

BETWEEN BRUCE WEST Applicant

ANDDAMIEN GRANT and STEVEN KHOV Respondents

Hearing: 24 June and 11 July 2013

Counsel: RB Hucker for Applicant
BJ Norling and JK Boparoy for Respondents

Judgment: 18 November 2013

RESERVED INTERIM JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Orders under s 284 Companies Act 1993)

This judgment was delivered by me on 18 November 2013 at 4.30 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors: Hucker Associates, Auckland
Waterstone Insolvency, Auckland

BRUCE WEST v DAMIEN GRANT and STEVEN KHOV [2013] NZHC 3043 [18 November 2013]

[1] The applicant, Bruce West, applies for an order under s 284 of the Companies Act 1993 replacing the liquidators of Meadowlane Limited with the liquidators of his choice and, alternatively, an order directing the current liquidators to take specified steps in the liquidation. As Mr West claims to be a creditor of Meadowlane, he requires and applies for, leave to bring the application.

[2] The respondents Damien Grant and Steven Khov are the liquidators of

Meadowlane. They oppose the application.

Background

[3] Meadowlane was originally known as International Entertainment (NZ) Ltd. It was run by Eugene and Rosemarie McCarthy, its directors. Mr West was employed by International Entertainment (NZ) Ltd as its Chief Executive Officer.

[4] International Entertainment (NZ) Ltd ceased to trade on 31 March 2011 as a result of a shareholder dispute. The company was placed into voluntarily administration on 2 July 2012 and Damien Grant and Steven Khov were appointed administrators. That same day the company’s name was changed to Meadowlane. Meadowlane was placed into voluntary liquidation on 30 July 2012.

[5] In the reorganisation spawned by the shareholders’ dispute, Meadowlane’s assets and business were divided by Eugene McCarthy and Rosemarie McCarthy and their respective companies, International Entertainment (Aust) Pty Limited and International Entertainment Limited.

[6] Mr West now works for Mr McCarthy’s company, International Entertainment (Aust) Pty Limited in which he appears to have a proprietary interest through a company he owns. Mr West contends that he is a creditor of Meadowlane, claiming for holiday pay of approximately $9,000 and pay in lieu of notice amounting to just over $50,000; and that the liquidators are not conducting a proper investigation into the affairs of the company or willing to fund appropriate recovery action for the purpose of the liquidation.

[7] On 30 October 2012 Mr West lodged a proof of debt in Meadowlane’s liquidation. The liquidators have not accepted or rejected his proof of debt which they say was lodged after the first creditors’ meeting. Their position is that they await further supporting material from Mr West. On 19 February 2013, Mr West filed this application.

The Application

[8] In his application Mr West moves for orders appointing Mr Meltzer and Mr Lamacraft as replacement liquidators and, in…

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 West v Grant

Details

AGLC: West v Grant [2013] NZHC 3043
Case: [2013] NZHC 3043
Decision Date: 18 November 2013

CaseChat Overview and Summary

The applicant, Bruce West, seeks to challenge the actions of the liquidators of Meadowlane Limited, Damien Grant and Steven Khov, by applying for orders under section 284 of the Companies Act 1993 to replace the liquidators with liquidators of his choice or, in the alternative, to direct the current liquidators to take specified steps in the liquidation. Mr West claims to be a creditor of Meadowlane and, as such, requires leave to bring the application. The respondents oppose the application. The central issue for determination is whether there is a case for intervention by the Court and, if so, whether the Court should exercise its discretion to order the replacement of the liquidators or give directions to the respondents to take specified steps. The Court found that while Mr West is arguably a creditor, he has not established a sufficient foundation for the substantive orders that he seeks by way of replacement liquidators or extensive directions. The Court accepted that there is a case for requiring additional explanation from the liquidators on some matters and declined to make orders under section 284 either by way of replacement orders or supervisory orders in the form of directions in respect of the conduct of the liquidation. The Court issued an interim judgment and gave leave to either side to seek that the matter be brought back before the Court once the liquidators have filed their report. At this stage, it is appropriate that costs be reserved.

Orders