Body Corporate 384825 v Queenstown Lakes District Council

[2021] NZHC 2324

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-425-29

BETWEEN

BODY CORPORATE 384825

First Plaintiff

AND

GEORGE FRASER RALSTON & ORS

Second Plaintiff

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

First Defendant

AND

YEO CONTRACTING LIMITED

Second Defendant

AND

JK’S & WBE LIMITED

Third Defendant (Discontinued)

AND

STUART IAN CRUICKSHANK

Fourth Defendant

AND

PAREMATA CONSTRUCTION LIMITED

Fifth Defendant

continued…..2

Hearing:

On the papers

Appearances:

D J Powell for Plaintiffs

C M Meechan QC and R M Saunders for First Defendant

Judgment:

6 September 2021

REASONS JUDGMENT OF ASSOCIATE JUDGE LESTER

BODY CORPORATE 384825 v QUEENSTOWN LAKES DISTRICT COUNCIL [2021] NZHC 2324

[6 September 2021]

ANDHOLMES STRUCTURES LIMITED (IN LIQUIDATION)

Sixth Defendant

ANDARCH UNDERWRITING AT LLOYD’S LIMITED

Seventh Defendant

AND              ASTA MANAGING AGENCY LIMITED

Eighth Defendant

ANDHARDY (UNDERWRITING AGENCIES) LIMITED

Ninth Defendant

AND              LIBERTY MANAGING AGENCY LIMITED

Tenth Defendant

ANDELLIOTT ARCHITECT LIMITED (IN LIQUIDATION)

Eleventh Defendant

AND              STEPHEN BRUCE McLEAN

First Third Party

ANDELLIOTT ARCHITECT LIMITED (IN LIQUIDATION)

Second Third Party

AND              ROSS McGREGOR WENSLEY

Third Party

ANDARCH UNDERWRITING AT LLOYD’S LIMITED

Fourth Third Party

AND              ASTA MANAGING AGENCY LIMITED

Fifth Third Party

ANDHARDY (UNDERWRITING AGENCIES) LIMITED

Sixth Third Party

AND              LIBERTY MANAGING AGENCY LIMITED

Seventh Third Party

[1]        On 21 July 2021 I issued a Results Judgment in relation to an application by the plaintiffs and by the first defendant to continue their respective claims against the

eleventh defendant, Elliott Architect Ltd, which had been placed in liquidation.1 Leave was granted noting that a Reasons Judgment would follow.

[2]        There is some overlap between this proceeding and another proceeding involving Body Corporate 355492.

[3]        The eleventh defendant in this proceeding, Elliott Architect Ltd (in liq) (the company), is also a party in the related proceeding. A similar application for leave to continue against the company was made in that proceeding and I issued a judgment in that matter on 27 July 2021.2

[4]        Having considered the merits of the application for similar proceedings to continue against the company in that judgment, I was able to issue the Results Judgment in this proceeding given the overlap of issues and parties.

[5]        This proceeding was issued in 2016 with the company originally being added as a third party the following year and subsequently as a defendant.

[6]        Mr Iain Andrew Nellies, a licensed insolvency practitioner, was appointed liquidator of the company on 1 June 2021 by special resolution of the company’s shareholders, Mr Elliott and Ms J M Elliott. The liquidator was advised that the company was solvent and the shareholders made a declaration to that effect immediately before passing the resolution to place the company into liquidation. The liquidator has advised that he was not made aware of these proceedings when appointed and he took the solvency declaration at face value.

[7]        The application for leave to continue is necessary as a result of their claims against the company being stayed by virtue of s 241(1)(c) of the Companies Act 1993 (the Act).

1      Body Corporate 384825 v Queenstown Lakes District Council [2021] NZHC 1848 [21 July 2021 Judgment].

2      Body Corporate 355492 v Queenstown Lakes District Council [2021] NZHC 1914 [27 July 2021 Judgment].

[8]        The liquidator was made aware of this application and filed a memorandum advising that there were no realisable assets in the company and, as far as he was aware, the company had no creditors. One pre-existing creditor (the Inland Revenue Department) has been taken over by Mr Elliott personally.

[9]        The liquidator advised that he did not consent to the proceedings continuing but he had no funds to instruct counsel to oppose. Essentially, the liquidator leaves the matter to the Court to resolve but he elected to take a conservative position on the issue of leave - hence the parties bringing the present application. The liquidator’s position is that if leave is given he will not take any active part in the proceedings and will abide by the judgment.

[10]      As I referred to in the 27 July 2021 Judgment,3 Jagose J has in a recent decision, JK Trading Ltd v RimPro-Tec Ltd (in liq),4 set out the relevant principles applying to an application for leave.

[11]      In a sense, the issue of leave is neutral to the position of the company. It does not have any creditors and hence there are none to be prejudiced through the proceedings continuing. Given the company has no assets there is no risk of such being diverted into defending litigation.

[12]      In the absence of there being any prejudice through the proceeding continuing and given the company has been involved in the litigation for an extended period, leave was granted, as recorded in the Results Judgment.

[13]      Again,  given  the  complexity  of  this  case,  as  Jagose  J   concluded  in   JK Trading Ltd, the more convenient method to determine an applicants’ claim to be unsecured creditors of the company is through proceedings.5

3      27 July 2021 Judgment, above n 2, at [10].

4      JK Trading Ltd v RimPro-Tec Ltd (in liq) [2019] NZHC 376.

5      JK Trading Ltd, above n 4, at [19], citing Satara Co-operative Group Ltd v Fus Ltd (in liq)

HC Napier CIV-2008-441-856, 30 January 2010 at [9].

Leave to withdraw

[14]      Mr Morrison, counsel for Elliott Architect Ltd (in liq), along with his instructing solicitor, seek leave to withdraw as solicitor on the record and counsel for the company. The liquidator is aware of that application.

[15]      Leave to withdraw is granted. The address for service of Elliott Architect (in liq) is at the office of the liquidator, Iain Andrew Nellies.

Associate Judge Lester

Solicitors:

Grimshaw & Co, Auckland (for Plaintiffs) Counsel: P R Grimshaw and D J Powell, Auckland Wynn Williams, Christchurch (for First Defendant)

Counsel: R M Saunders and S D Campbell, Christchurch Greig Gallagher & Co, Wellington (for Second Third Party) Counsel: J M Morrison, Barrister, Wellington