BBG HOLDINGS LIMITED (in liquidation) v FATUPAITO and BOWKER as joint and several liquidators of CIT HOLDINGS LIMITED (in liquidation) [2021] NZHC 1877

BBG HOLDINGS LIMITED (in liquidation) v FATUPAITO and BOWKER as joint and several liquidators ofCIT HOLDINGS LIMITED (in liquidation) [2021] NZHC 1877 [23 July 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-2159[2021] NZHC 1877UNDER the Companies Act 1993 and the High CourtRules 2016IN THE MATTER of an application under s 284 of theCompanies Act 1993BETWEEN BBG HOLDINGS LIMITED (in liquidation)ApplicantAND VIVIAN FATUPAITO and LEONBOWKER as joint and several liquidators ofCIT HOLDINGS LIMITED (in liquidation)RespondentsHearing: 23 March 2021Appearances: B Gustafson and W van Roosmalen-Werie for the ApplicantM Tingey for the RespondentsJudgment: 23 July 2021JUDGMENT OF ASSOCIATE JUDGE SUSSOCKThis judgment was delivered by me on 23 July 2021 at 4.30pmpursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors/Counsel:Adam Stevenson Botterill, AucklandWaterstone Insolvency, AucklandBell Gully, AucklandB Gustafson, AucklandMJ Tingey, AucklandIntroduction[1] BBG Holdings Limited (in liquidation) applies for a review of a decision bythe liquidators of CIT Holdings Limited (in liquidation) to decline BBG's claim in theliquidation of CIT.[2] BBG's claim relies on invoices from BBG to CIT in respect of civil workscompleted by JG Civil Limited. The claim was initially accepted by the CITliquidators but several years later the decision was reversed, following submissions tothe liquidators on behalf of Mr Gregory Olliver that the claim should be rejected. MrOlliver was the director of BBG and CIT at the time the invoices were issued.[3] BBG does not accept the basis for rejecting the claim and so has brought thisapplication seeking a review of the decision.[4] Leave is required for a creditor to apply for review to ensure that liquidatorsare free to undertake their duties in a cost effective and efficient manner and onlyappropriate challenges proceed.Issues[5] The issues for determination are:(a) Should leave be granted to BBG as a creditor to bring the application?(b) Was it unreasonable for the liquidators of CIT to reject BBG's claim inthe liquidation of CIT?Background[6] The application involves two entities associated with Mr Olliver and his formerwife, Ms Sarah Sparks. It is important to consider the BBG claim in context, so thebackground facts are set out in some detail below. Mr Olliver and Ms Sparks' businessaffairs have been described by the Court of Appeal as having a "convoluted legalstructure" so unfortunately it is relatively complex.1[7] Mr Olliver and Ms Sparks began their relationship in 1997 and married on 18March 2000. They separated on 4 July 2012 and their marriage was dissolved on 25August 2014.2[8] Over the course of the couple's marriage, a number of properties werepurchased in Waimarie Street, St Heliers, through related entities. One of theproperties was used as the family home. The other properties (other than thoseimmediately adjacent to the family home) were viewed as a development opportunity.[9] In 2009, following the global financial crisis, bankruptcy proceedings werebrought against Mr Olliver. In order to try and salvage some value for the benefit ofthe family a plan was devised which was structured as a joint venture between theWaimarie Trust, controlled by Ms Sparks, and the Glover Trust, controlled by MrOlliver (at least at that time). The discretionary beneficiaries of both trusts includedMr Olliver, Ms Sparks and their children. The joint venture was to be carried outthrough CIT Holdings, the company for which the respondents are the liquidators.[10] A short history of the Waimarie properties is set out in CIT Holdings Ltd vGlover No.2 Ltd and I set it out here:3The Waimarie properties — a short historyThe properties[6] When Mr Olliver's insolvency proposal was being pursued in 2009,Mr Olliver and Ms Sparks embarked upon arrangements to have Mr Olliverdrop out of both legal and beneficial ownership of assets held by them or theirinterests.The Waimarie Joint Venture[7] Central to their arrangements was a joint venture agreement of March2009 (the Waimarie JV) to which the Glover Trust and the Waimarie Trustwere (through their corporate trustees) parties. (Glover No.2 subsequentlytook the Waimarie Trust's place as a party by the deed of novation referred toat [17] below).1 Glover No.2 Ltd v Glover Trust Ltd [2013] NZCA 608 at [10].2 Olliver v Sparks [2021] NZHC 220 at [11].3 CIT Holdings Ltd v Glover No.2 Ltd [2014] NZHC 3114 (footnotes omitted).[8] The recitals to the Waimarie JV indicate its purposes:"WHEREASA The parties have experience in the acquisition and potentialfor the Property. The opportunity has arisen to acquire theProperty by mortgagee sale. The purchase of that has to becompleted as a total package.B For the purposes of preserving the residential portion of theProperty for the benefit of Waimarie and maximising thepotential for the residue of the property without prejudicingthe residential portion the parties are to form the JointVenture.C Glover and Waimarie intend to contribute to the Joint Ventureby investing capital and borrowing on current account loansto the Joint Venture on the basis set out in this agreement."[9] The "Property" referred to in the Waimarie JV was defined ascomprising a number of properties, which I will refer to as the first trancheproperties.[10] The parties agreed that the Waimarie Trust would contribute "capital"and that the Glover Trust would contribute the Property. The Waimarie JVincluded the following further provisions:"1. Interpretation and definition"Percentage interests" means for Waimarie (yet [sic] havingcontributed to be [sic] cash equity to the Joint Venture) a 60% share,which shares shall include the distribution or transfer in specie of theresidential portion of the Property, and for Glover a 40% share."Property" means the properties set out in the schedule."residential portion" means the property (more or less) set out as thefirst listed in the schedule [being a reference to 22 to 24 WaimarieStreet]."2.3 Upon the commencement date:(a) Waimarie shall contribute the initial capital of $2,000,000.00;(b) Glover shall contribute the Property. The Property to remainin the name of the Glover owned company, CIT Holdings Ltd('CIT'), for so long as the Property or any part of it remainspart of the assets of the Joint Venture. The beneficialownership of the Property and other assets of the Joint Ventureshall be determined in accordance with the terms of thisagreement and not by reference [sic] the title to any part of theProperty or the shareholding of CIT.6. Termination6.1 This agreement shall terminate upon the transfer of theresidential portion to the Waimarie free of any encumbranceand completion of the realisation by sale of the remainder ofthe Property. On the completion of the transfer of theresidential portion and all sales of the remainder of theProperty any remaining cash assets shall be divided betweenthe parties in proportion to their respective percentageinterests in completion of the termination of the JointVenture."(I will refer to cl 2.3(b) as "the beneficial ownership clause").[11] The Waimarie JV concludes with an entire agreement clause whichstrips any prior understandings of all force or effect and provides that the JVagreement constitutes the sole understanding of the parties with respect to thesubject matter. In other words, the correct construction of the agreement is tobe derived from the words used in the written document read in theircontext but not (by reason of the entire agreement clause) from any previouswritten or oral discussions or understandings.[12] On 9 March 2009, CIT bought the first tranche properties funded bythe Waimarie Trust's $2,000,000 and an advance from the Bank of NewZealand (BNZ) of $6,750,000. The bank loan was secured by a first rankingmortgage over the first tranche properties and a General Security Agreement(GSA) over CIT's present and future property. Ms Sparks, as director of CIT,signed the mortgage and GSA documentation.[13] The following month, April 2009, the Glover Trust and the WaimarieTrust entered into an agreement supplementary to the Waimarie JV. Thesupplementary agreement recorded the purpose:A The parties are parties to a Joint Venture known as theWaimarie Joint Venture pursuant to an agreement dated_ March 2009.B A further opportunity has arisen in respect of adjacentproperties to those acquired under the joint-venture.C Waimarie intends to contribute further capital to the JointVenture on the basis set out in this supplementary agreement."(The gap in paragraph A, with a date omitted, is as it appears in the document).[14] In the supplementary agreement the Waimarie Trust agreed tocontribute further capital of $1,675,000 which the joint venture was to applyto the purchase of further properties (which I will refer to as the second trancheproperties). The supplementary agreement repeated in materially identicalterms the beneficial ownership clause of the Waimarie JV.[15] In April 2009, CIT purchased the second tranche properties for$1,650,000.[16] The BNZ was not notified of the purchase of the second trancheproperties but those properties became subject to the GSA as after-acquiredproperty of CIT.[11] In the latter half of 2010 the relationship between Ms Sparks and Mr Olliverbegan to deteriorate and the couple separated in July 2012. Unbeknownst to MrOlliver, Ms Sparks settled the Glover No.2 Trust and executed a suite of documentsfor the purpose of transferring the second tranche of properties from CIT (of whichshe was a director at the time) to Glover No.2 Limited, as trustee for the trust. Bydeed of novation Glover No.2 replaced the Waimarie Trust as a party to the WaimarieJV. At the same time, Ms Sparks executed a declaration by Glover No.2 that it heldthe second tranche of properties on a bare trust for CIT.[12] The corporate trustees controlling CIT pursued recovery of the properties fromGlover No.2 through extensive litigation. First this Court and then the Court of Appealheld that CIT was entitled to have the second tranche of properties re-transferred toit.4 Glover No.2 then caveated CIT's titles for both the first tranche and second trancheproperties.[13] At the beginning of 2014, steps were taken to sell the properties includingoffering the properties to Ms Sparks and her related entities.5[14] On 19 June 2014, BBG agreed to purchase certain of the Waimarie Streetproperties from CIT. The sale and purchase agreement included the followingconditions:19. ConditionsThis agreement is conditional on:19.1 An agreement between the Vendor (as vendor) and Gregory MartinOlliver (or any other party acceptable to the Purchaser in thePurchaser's sole and absolute discretion) (as purchaser) for the saleand purchase of the properties at 18, 22 and 28 Waimarie Street, StHeliers, Auckland, being entered into with the same settlement dateas the Settlement date and otherwise on terms and conditions and at aprice acceptable to Gregory Martin Olliver (or other party) and thePurchaser, which is either unconditional or made unconditional by theSettlement date (Other Agreement). This condition is inserted forthe sole benefit of the purchaser.19.2 The Vendor procuring the withdrawal of all caveats affecting theProperty by the Settlement date including (without limitation) thefollowing registered caveats:(a) Caveat 9645842.1 by Glover No.2 Limited.(b) Caveat 9455113.1 by Glover No.2 Limited.(c) Caveat 9502174.1 by Bank of New Zealand.4 Glover Trust Ltd v Glover Trust Corporation Ltd [2013] NZHC 545; supplementary judgment[2013] NZHC 545 (23 September 2013); Glover No.2 Ltd v The Glover Trust Ltd [2013] NZCA608. Leave to appeal to the Supreme Court was declined on 7 May 2014: see Glover No.2 Ltd vThe Glover Trust Ltd [2014] NZSC 54.5 CIT Holdings Ltd v Glover No.2 Ltd [2014] NZHC 3114 at [22] – [34].[15] The deposit of $275,000 was only payable by BBG upon fulfilment of theconditions contained in cls 19.1 and 19.2 as set out above.[16] Settlement was to be four months after the date of the agreement, although itcould be extended for certain reasons, including for failure to procure the removal ofany caveat as long as CIT was using reasonable endeavours to remedy the issue.6[17] Between July 2014 and August 2014, JG Civil completed earthworks on theproperties.[18] On 1 August 2014, BBG invoiced CIT, recharging it for the earthworksundertaken by JG Civil. The invoice expressly stated it was to "Recharge JG CivilInvoice 64". Invoice 64 from JG Civil to BBG had the narration "Progress Claim 1for period 10-07-2014 to 28-07-2014. See Certificate of Payment attached". Thecertificate of payment by Woods as engineers certifying the value of the work is dated8 August 2014.[19] On 1 September 2014, BBG again invoiced CIT, recharging for JG Civilinvoice 75 to BBG in the sum of $619,416.68. Invoice 75 has the narration "ProgressClaim 2 for period 29-07-2014 to 31-08-2014. See Certificate of Payment attached."The certificate of payment is dated 29 September 2014 and again certifies the value ofthe works.[20] The vendor, CIT, applied to remove the caveats lodged over the properties byGlover No.2 on 1 July 2014. The application was heard on 15 September 2014 butdismissed in a judgment dated 5 December 2014.7 As a result, the contract never wentunconditional and title to the properties was not transferred to BBG.[21] On 4 March 2016 at 11.18am CIT was placed into liquidation with AndrewHawkes and Vivian Fatupaito appointed liquidators. Leon Bowker subsequentlyreplaced Mr Hawkes.6 Clause 20 of the sale and purchase agreement.7 CIT Holdings Ltd v Glover No.2 Ltd [2014] NZHC 3114.[22] On 4 May 2016 BBG submitted a creditor's claim signed by Mr Olliver in theliquidation of CIT for the two JG Civil invoices recharged totalling $836,012.06. Theclaim was filed through his solicitor and included copies of the invoices from BBG toCIT in support.[23] On 14 November 2016 the liquidators requested copies of the invoices fromJG Civil to BBG. These were provided to the liquidators on 15 November 2016.[24] The CIT liquidators realised CIT's assets (including selling the Waimarieproperties in 2018 to Oceania Village Company Ltd for $20,500,000) and after payingsecured and preferred creditors held approximately $3.8 million for distribution. Priorto settling the sale, the liquidators successfully applied to remove caveats lodgedagainst the properties by entities associated with Mr Olliver and secured an order forMr Olliver and members of his family to vacate the residential home at 22 WaimarieStreet.8[25] With the properties sold, on 8 March 2018 the liquidators wrote to BBGrequesting additional information to assess BBG's creditor's claim. The informationsought included:(a) the contract between BBG and JG Civil for the earthworks carried out;(b) the contractual basis for claiming interest on the outstanding balancepurportedly owing to BBG;(c) the drawings of the site, including any revisions or variations, inrelation to the work carried out by JG Civil;(d) the progress claims and certificate of payment submitted by JG Civilwith their invoices to BBG; and(e) evidence of payment made by BBG to JG Civil for the invoices beingrecharged to CIT.8 CIT Holdings Ltd (in liquidation) v Auckland West Legal Services Ltd [2018] NZHC 232.[26] On 29 March 2018 the lawyers for BBG responded as follows:(a) no written contract was prepared for the earthworks between JG Civiland BBG;(b) that Mr Olliver, the director of BBG, had advised BBG's lawyers thathe had instructed JG Civil to carry out the works specified by Woodsas engineer and that he understood that a contract was being drafted andwould have been signed in due course;(c) Mr Olliver says that the earthworks on sites ceased early because of thelegal situation in relation to the caveats placed on the relevant titles byMs Sparks' interests and that a written contract was never concluded;(d) in respect of interest, Mr Olliver advised that BBG's intention was toenter into a standard industry contract with JG Civil and that interestwas payable to them pursuant to that contract, with a copy of thestandard contract to be forwarded the following week;(e) the drawings and schedules for the works were attached;(f) the progress claims submitted by JG Civil together with copies of thecertificates of payment and JG Civil's invoices were also attached; and(g) confirming that BBG had not yet paid JG Civil so the amounts werestill owing.[27] On 15 August 2018, the liquidators confirmed to BBG that their claim wasaccepted in the sum of $836,012.06 (with interest on the claim rejected).[28] Just over a year later, on 4 September 2019, BBG was placed into liquidationby special resolution of the shareholder. Mr Damien Grant of Waterstone Insolvencywas appointed liquidator.[29] On 19 September 2019, JG Civil filed an unsecured creditor's claim in theliquidation of BBG. The claim was for the earthworks completed over the WaimarieProperty in the sum of $836,012.06.[30] On 30 October 2019, Mr Grant requested confirmation of BBG's claim in theliquidation of CIT from the CIT liquidators.[31] On 7 November 2019, the CIT liquidators confirmed acceptance of BBG'sclaim in the liquidation in the sum of $836,012.06.[32] During the liquidation of BBG, Mr Olliver maintained to Mr Grant that entitiesrelated to him were creditors in the liquidation of BBG in the sum of around $8 million.[33] On 6 December 2019, Mr Olliver sent Mr Grant a spreadsheet of proposedclaims which included:(a) Bankhouse Trust - $209,096;(b) Durafort Investments - $7,687,239;(c) Leefield Ventures Ltd - $27,853;(d) Ollie & Co Ltd - $94,032;(e) Phoenix Trust - $5,000.[34] Mr Grant advised Mr Olliver that in order to claim these amounts Mr Olliverneeded to submit creditors' claims supported by adequate paperwork evidencing theclaims. Mr Olliver then provided Mr Grant with emails and spreadsheets showingsimilar amounts. Mr Grant deposes that he advised Mr Olliver via several phone callsthat such spreadsheets were insufficient and that Mr Grant was not going to considerthese entities as creditors until formal proof of debt forms were provided and furthersupporting information.[35] On 15 January 2020, Mr Grant requested an informal creditors' meeting withthe CIT liquidators as he was concerned at the delay in the CIT distribution. Heproposed applying, at his own cost, for an order from the High Court for a distributionto be made to BBG. Mr Grant's request for an informal creditors' meeting was rejectedby the liquidators.[36] On 13 February 2020, Mr Grant again requested a meeting of creditors in CIT,this time formally pursuant to s 314 of the Companies Act.[37] On 3 March 2020, Mr Grant wrote to the CIT liquidators again regarding hisconcerns at the delay in distribution, with CIT holding nearly $4 million in cash andparticularly following the recent correspondence from the liquidators in relation to avery small claim (approximately $5000) in the Olliver Trustee liquidation, for whichMr Grant was also the liquidator.[38] The CIT liquidators scheduled a creditors' meeting for 16 March 2020. Thatmeeting was attended by a number of parties including the liquidators and their lawyer,Mr Tingey, Mr Olliver, Ms Sparks and Mr Grant. At the meeting, the liquidatorsoutlined several options to finalise the liquidation of CIT. An undertaking had beengiven by the liquidators to the High Court that no distribution would be made tocreditors without the leave of the Court but an issue had now arisen in relation to someof Mr Olliver's claims in the CIT liquidation.[39] Mr Grant deposes that it was agreed at the meeting that if Mr Olliver providedthe documents necessary for substantiating his claim to the satisfaction of the CITliquidators, the liquidators would make an application to the High Court within twomonths to make a distribution to creditors and to finalise the liquidation. Alternatively,if Mr Olliver did not provide the documents to the liquidators, then the liquidatorsagreed to retain $100,000 as a contingency to deal with Mr Olliver's outstandingclaims and to make an application to the High Court within two months on that basis.Mr Grant does not consider the liquidators adhered to the commitment given tocreditors at that meeting.[40] Then, on 21 July 2020, Mr Olliver emailed Mr Grant draft financial statementsfor BBG purporting to show related party creditors involved in claims in the BBGliquidation. These draft financial statements were supported by unsigned financialstatements for some of the proposed related party creditors.[41] Mr Grant responded the same day stating that more was required to approvethe creditors' claims. He queried what the $7.6 million owed to Durafort was for andstated that "unsigned financials are not going to be enough especially as I have PwChot on the case". Mr Olliver replied to Mr Grant on the same day stating "we don'thold the paperwork back that far. PwC were responsible for preparing the accountsand KPMG audited them".[42] On 27 July 2020, the liquidators of CIT wrote to the creditors of CIT seekingtheir consent to a proposed distribution, including to BBG for their accepted claim.[43] On 28 July 2020, Mr Grant wrote to Mr Olliver in relation to the claims madein the BBG liquidation in respect of his associated entities saying that the unsigneddraft and unaudited financial statements provided as evidence were insufficient tosupport the claims. Mr Grant said that at that stage he could not accept or reject thecreditors' claims on the basis of the information provided and he had written to theaccounting firm that had prepared the draft financial statements seeking furtherclarification.[44] On 30 July 2020, Mr Grant deposes that he advised Mr Olliver by telephonethat, based on the documents provided to date, he was not going to accept any of theclaims put forward by Mr Olliver in the liquidation of BBG. Mr Olliver responded bysaying that he would ensure that BBG's claim in the CIT liquidation would be rejectedand that he was going to instruct his lawyer to ensure that the BBG claim would be setaside.[45] Less than two weeks later, on 10 August 2020, the liquidators wrote to MrGrant advising that there had been a request to reject BBG's previously acceptedclaim, attaching a partially redacted copy of the request and without indicating whothe request was from.[46] The redacted request forwarded to Mr Grant said that recent material had cometo light which suggested that BBG had incurred the liabilities for earthworks on thebasis that it had signed an agreement for sale and purchase of the Waimarie Propertiesand had itself become the principal for the purposes of the development. A copy ofthe sale and purchase agreement was enclosed with the request. The request went on:[BBG] only started incurring liabilities once it became the equitable owner ofWaimarie Properties. The liabilities it incurred (from which its claim in theliquidation of CIT derives) were in fact incurred for its own benefit. Inincurring these liabilities [BBG] assumed the risk that the parties to the SPAmight not be able to settle (which was ultimately the case, owing to Ms Sparks'notices of claim). Having assumed that risk, BBG cannot now refer itsliabilities to [CIT].[47] On 26 August 2020, Mr Grant's lawyer responded to the CIT liquidatorssaying that they had reviewed the sale and purchase agreement from June 2014 andthat the agreement was conditional on the caveats being removed, which did nothappen until three and a half years after the settlement date of October 2014 stated inthe June 2014 agreement. Mr Grant's lawyer went on to say that the agreement neverwent unconditional and could never have been enforced. After referring to the transferof the titles to Oceania Village Company Limited in 2018, Mr Grant's lawyer statedthat they believed it was unreasonable to conclude that BBG was incurring liabilitiesfor which it could receive no benefit. The letter finished by saying they had requestedthe purchase file from the solicitor instructed for BBG on the sale and purchase of theproperty.[48] On 17 September 2020, Mr Grant's lawyer obtained BBG's solicitors' filerelating to the sale and purchase agreement and provided it to the CIT liquidators.[49] On 23 September 2020, the liquidators wrote to Mr Grant and said they hadreviewed CIT's solicitors' file in relation to the sale and purchase agreement and itwas the liquidators' view that the claim should not now be admitted in the CITliquidation. The liquidators confirmed in this letter that "Mr Olliver, the director ofboth companies, now disputes that BBG should be accepted as a creditor in CIT". Thiswas the first time the liquidators had advised that the request to reconsider the claimhad come from Mr Olliver.[50] I record that the evidence of Mr Grant that Mr Olliver said he would ensurethat BBG's claim would be rejected was not challenged in Mr Olliver's affidavit swornin support of the CIT liquidators' opposition to the application to review. In cross-examination Mr Olliver attempted, however, to challenge some of Mr Grant'sevidence saying that Mr Grant did not say he was going to reject Mr Olliver's entities'claims but instead that he had not made a decision yet. Mr Olliver went on to say thereason for his request to the liquidators to reject the BBG claim was because he cameacross the sale and purchase agreement between BBG and CIT when looking forfurther documents for Mr Grant and immediately thought "well hold on this must havean impact on things". Mr Peter Spring, one of his lawyers, then recommendedproducing it to the liquidators. Mr Olliver's evidence was that he did not talk to theliquidators about what was said in Mr Spring's letter.[51] If Mr Grant's evidence had been challenged in Mr Olliver's affidavit, Mr Grantcould then have been cross-examined as required by s 92 of the Evidence Act 2006.A number of options are available under s 92 in these circumstances including to admitthe contradictory evidence on the basis that the weight given to it may be affected.9 Inthe circumstances I have decided to admit Mr Grant's evidence in relation to theseconversations although in some cases contradictory but afford it little weight.[52] On 29 September 2020, Mr van Roosmalen-Werie, in-house counsel for MrGrant, responded to the CIT liquidators referring to the fact that the deposit of$275,000 was not payable until Conditions 19.1 and 19.2 had been complied with andthat it was undisputed that that did not occur. The deposit was therefore never paidand settlement did not take place. The letter stated that BBG was never the equitableowner of the Waimarie property and that the agreement never went ahead "due to CITnot upholding its contractual obligations under the agreement".[53] Finally, on 2 October 2020, the CIT liquidators wrote to Mr Grant formallyrejecting BBG's claim. The email referred to the "analogous facts scenario" inAvondale Printers & Stationers Limited v Haggie,10 saying that in that case theplaintiff spent money improving land which belonged to someone else, reasonablyanticipating that they would become the legal owner in the future. After quoting fromthe case, the liquidator recorded that Mahon J declined the claim on the basis that a9 s 92(1)(b) of the Evidence Act.10 Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124.person who lays out expenditure on the property of another, whether as tenant orintending purchaser, acts entirely at their own risk.[54] The liquidators also referred to Planet Kids Ltd v Auckland Council, where theSupreme Court stated that upon entering into a contract for the sale of land, theproperty belongs to the purchaser in equity even when the agreement is conditional.11[55] The email summarised the position as follows:BBG undertook work, knowing that they ran the risk of not receiving anyreward (should the condition not be fulfilled), and without any agreement fromCIT that the work should be undertaken or that BBG would be compensatedfor the work. There is no basis for a claim.[56] On 2 November 2020 Mr Grant filed this application for review of the CITliquidators' decision to reject BBG's claim, including for leave to bring the claim.Should leave be granted to BBG to bring this application?Is BBG a creditor for the purposes of s 284(1)(b)?[57] As set out above, an application for review of a liquidator's decision by acreditor requires leave.[58] The Companies Act 1993 Liquidation Regulations 1994 make it clear that acreditor whose claim has been rejected may still apply as a creditor under s 284(1)(b)of the Act12 so BBG may apply.[59] Furthermore, in Manifest Capital Management Pty Ltd v Lawrence, Heath Jgranted leave to Manifest following the rejection of their liquidation claim, with hisHonour describing Manifest as a "putative creditor".1311 Planet Kids Ltd v Auckland Council [2013] NZSC 147.12 Companies Act 1993 Liquidation Regulations 1994, regs 15 and 16.13 Manifest Capital Management Pty Ltd v Lawrence HC Auckland CIV-2010-404-007741, 20December 2011.Legal principles regarding leave[60] The test for leave under s 284(1) was set out in Trinity Foundation (ServicesNo.1) Ltd v Downey.14 The Court held that a creditor must do more than merelydemonstrate that its claim is sustainable but also that it has an arguable case. AssociateJudge Lang (as he then was) held that an arguable case for the grant of leave is requiredto have two characteristics:15(a) a credible factual basis; and(b) a reasonable likelihood that if the claim is established, the Court willdisturb the act or decision in question.[61] The Court is only likely to reverse an act or decision of a liquidator if the actor decision is unreasonable. Applying this standard ensures that the object of thelegislation will be met, because truly meritorious claims will be granted leave. Thesection therefore strikes a balance between preserving the rights of meritoriousclaimants, whilst at the same time ensuring that the assets of the company inliquidation are not frittered away as a result of claims that are unlikely to succeed.16Is there a credible factual basis for BBG's claim?[62] BBG's claim is based on invoices issued by BBG to CIT in August andSeptember 2014 for earthworks completed on the Waimarie properties by JG Civil. Atthe time the invoices were issued Mr Olliver was the sole director of BBG and CIT.[63] When CIT went into liquidation in 2016, Mr Olliver submitted a claim onbehalf of BBG supported by copies of the invoices issued by BBG to CIT for theearthworks.14 Trinity Foundation (Services No.1) Ltd v Downey (2005) 9 NZCLC 263,917 (HC) at [17]–[20].15 At [21].16 At [22].[64] The liquidators did not ask for a copy of the contract between BBG and CITproviding that CIT would pay for the earthworks, presumably because Mr Olliver wasthe sole director of both BBG and CIT at the time the invoices were issued, so theinvoices would not have been issued if CIT did not agree to pay.[65] When BBG was placed in liquidation in September 2019, the newly appointedliquidator, Mr Grant, confirmed BBG's claim had been accepted by the CITliquidators. Furthermore, a CIT creditors' meeting was held at which Mr Olliver, MsSparks, the liquidators and their lawyer, Mr Tingey, were present. Discussion includedreference to a distribution to BBG on the basis of the claim.[66] More than six years after the invoices were issued and four years after the claimwas made by BBG in the CIT liquidation, Mr Olliver asked the liquidators to rejectBBG's claim on the basis that "recent materials" had come to light which suggestedthat BBG incurred the liabilities for earthworks only as a purchaser after it had signeda sale and purchase agreement with CIT.[67] The "recent material" was a copy of the sale and purchase agreement betweenBBG and CIT dated 19 June 2014.[68] The sale and purchase agreement made it clear that BBG was only agreeing topurchase some of the BBG properties, with the condition set out in cl 19.1 stating thatthe remainder were to be the subject of a separate agreement between Mr Olliver andCIT. Mr Olliver accepted in evidence that the earthworks completed by JG Civil, thatwere on-charged to CIT by BBG, were not just on properties subject to the sale andpurchase agreement. They were also undertaken on 18, 22 and 28 Waimarie Street.This is a critical difference between the facts in this case and those in the cases reliedon by the liquidators, Avondale Printers and Planet Kids.[69] Even aside from that difference, the facts in Avondale Printers were verydifferent from the facts in this case, as is apparent from the passage quoted by theliquidators in correspondence with Mr Grant:1717 Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 at 155The primary consideration would be the expenditure by the plaintiffof this large sum of money for which liability in restitution is nowdenied. The plaintiff spent part of that money when he was the ownerof the property in equity and when he anticipated becoming the legalowner. That expectation was shared by the defendant, who couldtherefore not be the object of any moral censure in that respect. Thebalance of the money was spent after the defendant took title, but itwas necessarily spent in order to complete the programme of workswhich had been embarked upon by virtue of the contract between theplaintiff and the builder. But as to this further expenditure laid out bythe plaintiff after the defendant took title, the defendant specificallywithheld his consent. He warned the plaintiff, and he warned thebuilder, that he would not be responsible for payment of any workperformed on the property. Again the defendant could clearly not becharacterised as a person seeking to gain a pecuniary advantage byunjust means.(italics added)[70] By contrast here the invoices were issued by BBG to CIT immediately theearthworks were done between companies with the same director and even before thecertificates of payment were signed by Woods. The invoices were not rejected by CITat the time or for the next several years until the liquidators determined to reject theclaim.[71] Another important distinction with Avondale Printers is that the vendor andpurchaser were associated entities and the agreement was entered into against thebackdrop of the Waimarie JV.[72] The Waimarie JV was referred to in cross-examination by Mr Olliver, whosuggested that entry into the sale and purchase agreement by BBG was a way ofimplementing the JV agreement:Q. Some of the properties in this development were going to be owned ifyou could get the caveats off by BBG and some of them were goingto be owned by you or other entities you controlled?A. That's correct. That was the intention, which was the originalintention on the original JV agreement. So I think to simplify it, allwe were looking to do was implement the original JV agreement thatwas put in place on the properties.[73] The Waimarie JV expressly states at clause 2.3 that the beneficial ownershipof the Property and other assets of the Waimarie JV is to be determined in accordancewith that agreement "and not by reference [sic] the title to any part of the Property orthe shareholding of CIT".[74] The termination date for the Waimarie JV was "upon the transfer of theresidential portion to the Waimarie [Trust] [sic] free of any encumbrance andcompletion of the realisation by sale of the remainder of the Property".18 Neither ofthese had happened at the time the earthworks were recharged by BBG to CIT in 2014.CIT Holdings Ltd v Glover No.2 Ltd, issued on 5 December 2014, confirmed that theWaimarie JV remained on foot.19[75] Both the liquidators and their lawyers must have been aware of the WaimarieJV because the beneficial ownership of the Waimarie properties that were held in CIT'sname was determined by the Waimarie JV.20 Furthermore, by the time the liquidatorsdecided to reject BBG's claim, there had been considerable litigation, including by theliquidators, in which the Waimarie JV was considered.21[76] In circumstances where the CIT liquidators must have been aware of the JVagreement and that the legal arrangements were complex, it is surprising that they didnot consider it, or seek further information from Mr Olliver or JG Civil regarding theearthworks and what properties they were completed on.[77] This is particularly the case where a request was made by Mr Olliver so late inthe liquidation and where the reversal of the liquidators' position would be likely toresult in entities associated with Mr Olliver receiving a greater distribution thanotherwise.2218 Clause 6, see extract above at [10] from CIT Holdings Ltd v Glover No.2 Ltd [2014] NZHC 3114at [10].19 CIT Holdings Ltd v Glover No.2 Ltd at [90].20 At [51].21 Harris v The Bank of New Zealand [2018] NZHC 2386; CIT Holdings Ltd (In Liq) v AucklandWest Legal Services Ltd [2018] NZHC 232; Olliver v Sparks [2021] NZHC 220.22 Mr Olliver disputes this but to do so he relies on the claims of entities associated with him in theBBG liquidation being accepted and Mr Grant has indicated that these claims will be rejected iffurther supporting documents are not provided.[78] From the above, it is clear that there is a credible factual basis for BBG's claim.The claim is consistent with the contemporaneous documents issued at the time, whichincluded invoices issued by BBG to CIT and not rejected at the time. Furthermore,the invoices were issued when Mr Olliver was the sole director of BBG and CIT. Theclaim was initially accepted by the liquidators with full knowledge that the invoiceswere for earthworks being on-charged by BBG to CIT and following provision ofcopies of the progress claims submitted by JG Civil and the certificates of paymentissued by Woods. It was only after a request from Mr Olliver that the claim wasreconsidered. The request relied on the equitable estate passing to BBG as thepurchaser under the sale and purchase agreement, but that agreement on its face didnot relate to all of the Waimarie property and nor was the Waimarie Joint Venture("Waimarie JV") considered.Is there a reasonable likelihood the Court will disturb the decision in question?[79] I now move on to the second stage of the test for leave: whether there is areasonable likelihood that if a claim is established, the Court will disturb the decisionin question.[80] This is relatively briefly answered. The decision of the liquidators relies onthe application of legal principle to what the liquidators consider to be the relevantfactual material. When the liquidators were relying on the contemporaneousdocuments provided in support of BBG's claim, the claim was admitted. Theliquidators then decided to reverse what is a substantial claim on the basis of legalprinciple. If that legal principle is not applicable or the facts in the cases relied uponare distinguishable, there is a very reasonable likelihood that the Court will disturb thedecision to reject the claim.[81] In Manifest Capital Management Pty Ltd v Lawrence, Heath J described hisapproach to considering an application to reverse a liquidators' decision as follows:23The liquidators made a relatively peremptory decision to reject the claim.Before doing so, they did not obtain all relevant information. Nor were stepstaken to examine relevant witnesses, even though power to do in Australia had23 Manifest Capital Management Pty Ltd v Lawrence HC Auckland CIV-2010-404-007741, 20December 2011 at [8].been conferred on the liquidators by the Federal Court. Additional evidence isnow before me. Two of the witnesses for Manifest have been cross-examined.Manifest is entitled to have its challenge considered by this Court on the basisof the evidence that is now available. My task is to undertake a freshassessment of whether the claim should be admitted to proof.[82] In Noyce v Parnell Property Investments Limited Woodhouse J endorsed thisapproach, saying that the Court will undertake a fresh assessment of whether a claimshould be admitted where either it is obvious that the liquidator has not actedreasonably because they did not request or consider relevant evidence, or new andrelevant evidence is before the court that was not available to the liquidator.24[83] Both of the above cases make it clear that the Court will disturb a decision ofa liquidator where the liquidator has not taken all of the relevant information intoaccount. That appears to be exactly the position here.[84] Furthermore, the CIT liquidators' decision is not a matter of commercialjudgment, as some liquidators' decisions are, and so there cannot be a concern thatreversing the liquidators' decision would interfere with a commercial decision ofexpert liquidators.Decision on leave[85] As there is a credible factual basis and a reasonable likelihood that the Courtwill disturb the decision in question, the two characteristics necessary for establishingan arguable case are present. I therefore grant leave to bring the application.Was it unreasonable for the liquidators of CIT to reject BBG's claim?[86] The liquidators rejected BBG's claim on the basis that the equity in theproperty would have passed to BBG as the purchaser and any works done weretherefore for BBG's own benefit. However, the earthworks completed were not onlyon properties that BBG had agreed to purchase and the context in which the earthworkswere completed included the existence of the Waimarie JV.24 Noyce v Parnell Property Investments Limited [2015] NZHC 2037 at [45].[87] Furthermore, it is not clear that the equitable estate would necessarily havepassed to BBG on the signing of the sale and purchase agreement in respect of theproperties to which it related. In Bevin v Smith the Court of Appeal held:25There will be some conditional contracts, particularly those subject to trueconditions precedent, where the parties cannot be regarded as intending thatequitable title will pass to the purchaser until the condition is waived orfulfilled.[88] A later decision of the Court of Appeal, O'Leary v Sentiero Properties Limited,referred to the above passage and went on:26[33] Features of the May agreement which point against an intention topass equitable title are the fact that the deposit was not payable until theagreement became unconditional and the open ended nature of cl 14.0. Thatclause effectively allowed Sentiero to pull out of the contract for any reasonprior to 14 July 2004. In those circumstances, there is an argument that theparties cannot have intended an equitable interest to pass until Sentiero haddeclared the condition unconditional and had paid the deposit.[89] In the present case, the deposit was not payable by BBG until fulfilment ofboth conditions contained in cls 19.1 and 19.2, and there may be other relevant factors.I do not need to consider these further, however, because whether the equitable estatepasses or not is not determinative now that it is clear the sale and purchase agreementbetween BBG and CIT does not relate to all of the properties on which earthworkswere undertaken.Contemporaneous documents[90] The contemporaneous documents support there being an agreement betweenBBG and CIT for CIT to pay for the earthworks. This is because the invoices issuedby BBG to CIT at the time were clearly recharging the invoices issued by JG Civil toBBG. The invoices were accepted by CIT. They related to earthworks not just on theWaimarie properties that were the subject of the sale and purchase agreement betweenBBG and CIT, but also on other Waimarie properties. In addition, Mr Olliver was thesole director of both BBG and CIT at the time the invoices were issued.25 Bevin v Smith [1994] 3 NZLR 648 at 665.26 O'Leary v Sentiero Properties Limited (2006) 7 NZCPR 869 at [32] – [33].[91] Under cross-examination, after admitting that the work completed by JG Civilincluded the removal of one driveway and development of another, Mr Olliverattempted to say that the work on the sections not subject to the sale and purchaseagreement, including 22 (the section with the family home) and 28 Waimarie St, wasonly for the purposes of traffic management. Later on, in re-examination Mr Olliverdescribed the quantity of works on the properties that were not the subject of the BBGagreement as "miniscule in the scheme of things", work that Mr Olliver, after a roughcalculation, said would only have cost approximately $4000. I did not find thisevidence consistent or compelling.[92] Mr Olliver would not go so far as to accept in cross-examination that CIT"agreed" to pay for the earthworks, but his explanations as to why the earthworks wererecharged by BBG to CIT, if CIT had not agreed, were not convincing. They rangedfrom not being aware of the invoices, despite their size and his admitted focus at thetime on making the land more saleable so the bank could be repaid, to not being ableto recall why BBG's claim was put into the liquidation if CIT had not agreed to pay.At other times he refused to be drawn, saying it was a legal question:Q. So when you look at this, Mr Olliver, you'd accept wouldn't you thatJG Civil in doing this work in July and August are doing it onproperties which are not part of the sale and purchase agreementbetween BBG and CIT?A. Correct.Q. And it's actually CIT that own for instance the existing house, lot 2,30309, that's right, isn't it?A. Yes they owned it all.Q. No, but we're trying to –A. I understand what you're saying, but yes it owned it, but it owned it,but it owned it all.Q. Okay, CIT, this is really important, Mr Olliver, because –A. What you're trying to say is that they're doing work on land that BBGhad not contracted to buy?Q. Correct?A. Why didn't you just come out and ask that?Q. Well, you agree with that proposition?A. Absolutely, you could have asked that 20 minutes ago.Q. You knew that when Keegan Alexander wrote the letter saying thatlegally CIT had made a mistake and CIT was not liable for work thathad been invoiced. You knew that didn't you?A. Well it was in [wasn't] front of my mind, but if they hadn't put this inthey couldn't have done the earthworks.Q. The whole point of your complaint about BBG is that BBG cannotclaim for work done on properties it was going to buy.A. No that's not my point. That's a legal position, which I'm notqualified to comment on.Q. Okay, do you want to have a look at Mr Springs' letter to theliquidators?A. Yeah, so I took legal advice twice about when this fact arose and Ifollowed that advice, but that's a legal question as to whether BBGhas a right to claim against CIT.Q. But it's also I think you'd agree a factual question, isn't it?A. I'm not – that's beyond my pay grade. I'm not a lawyer.[93] The re-examination of Mr Olliver by counsel for the liquidators furtherreinforces that Mr Olliver avoided expressing a view on the facts but was relying onlegal argument:Q. Now my learned friend asked you about those invoices?A. Yes.Q. And you said they were prepared by PWC?A. No the invoices weren't prepared by PWC, they would have beenproduced by my (inaudible 10:57:13) accountant at the time, whichwould have been Anne Dew.Q. And were they properly prepared?A. Well in hindsight no. I mean did Anne think she was doing the rightthing? I absolutely think she did. A very fastidious person, but withthe knowledge that we have now they're clearly not.Q. Well could you perhaps explain to the Court why they wereincorrectly issued?A. Um, well I think that Anne at the time, she's the accountant and she'sprocessing those and not aware of the legal implications and probablynot even the contract. In fact almost certainly so. So she simply on-charged, it's pretty common for as mentioned that there'd been over ahundred companies and there's 48 running now, which we're tryingto reduce, but there's a lot of intercompany specialist legals on-charges and whatever they go on, so it's a monthly occurrence.Q. But were they issued correctly?A. At the time or now?Q. Based on what you know now.A. Oh definitely. Now that I know the law and everything that's visiblethat they were incorrectly issued.The JV agreement[94] Under cross-examination, when explaining entry into the sale and purchaseagreement, Mr Olliver said "all we were looking to do was implement the original JVagreement that was put in place on the properties".[95] Although the JV agreement was not in evidence before me, it is discussed indetail and key clauses are quoted by Associate Judge Osborne (as his Honour thenwas) in CIT Holdings v Glover No.2 Ltd.27 His Honour dismissed CIT's applicationto remove caveats lodged over the properties by Glover No.2, the corporate trustee forthe Glover No.2 Trust controlled by Ms Sparks. CIT's application was brought on 1July 2014, shortly after the sale and purchase agreement between BBG and CIT wasentered into, and determined on 5 December 2014, several months after the earthworkshad stopped in August 2014. His Honour found:28[51] It is at least arguable that Glover No.2 in this case has aninterest both in the land and the net proceeds of the sale of the jointventure assets. The beneficial ownership clause makes it clear thatCIT is to become the owner of the properties only "in name", withbeneficial ownership of the properties and other assets of the jointventure being determined in accordance with the terms of theWaimarie JV. The joint venturers' respective interests through theirbeneficial ownership of the property and other assets are then definedto be a 60 per cent and 40 per cent share respectively. While it is clearthat the Waimarie JV contemplates that the share of each party willultimately be received (with the exception of the residential portion)by way of the proceeds of sale of the remainder of the property it is27 CIT Holdings v Glover No.2 Ltd [2014] NZHC 3114 at [7] – [16].28 At [51].arguable that at least for the time being each party has an interest notonly in the ultimate proceeds but in the properties themselves.[96] His Honour went on to say that if the reference to CIT's bare trusteeship whichappeared in the 31 March 2014 financial statements prepared by Mr Olliver isultimately found to reflect the legal position, the joint venturers would each have theright to obtain an order requiring CIT to have the properties sold.29 As it was a caveatdecision, the Court was not required to finally determine the parties' rights but theCourt of Appeal in Fatupaito v Harris has since held that CIT did hold the property asbare trustee for the joint venture parties.30[97] BBG's position needs to be considered against the backdrop of the WaimarieJV. The JV agreement expressly states that the beneficial interest in the properties isto be determined in accordance with the JV agreement and not according to the titleof the properties or any shareholding of CIT. The position is not, therefore, as straightforward as the CIT liquidators considered it to be.[98] Mr Olliver said several times that the earthworks were done to make theproperties more saleable to ensure BNZ was repaid, describing it as his "sole motive".BNZ had a caveat over the Waimarie properties in respect of the money owed to it byCIT. If CIT repaid BNZ it would mean the properties could be sold and the parties tothe Waimarie JV paid out. This is consistent with the work being done to implementthe JV agreement, as Mr Olliver said in cross-examination.Was there a concluded bargain for CIT to pay for the earthworks?[99] In rejecting the claim, the CIT liquidators relied on the equity in the propertypassing to BBG on its entry into the sale and purchase agreement with CIT. Even ifthe equity in some of the Waimarie property did pass to BBG, however, it does notpreclude there being a separate agreement for CIT to pay BBG back for the earthworksundertaken by JG Civil.29 At [52].30 Fatupaito v Harris [2018] NZCA 497 at [5].[100] Counsel for BBG submitted that a contract between BBG and CIT should beimplied for BBG to organise the earthworks and charge them to CIT to pay when CITrealised the properties.[101] In Paper Reclaim Ltd v Aotearoa International Ltd,31 the Court of Appealstated that the test to determine whether dealings between parties establish a contractand the terms of that contract is "whether the parties' dealings, when viewedobjectively from the point of view of reasonable persons on both sides, allow only fora finding that a concluded bargain had been reached".32 The courts are entitled to lookat the whole context of the parties' relationship in reaching a view as to whether abargain was concluded and as to its terms.33[102] On the evidence, when viewed objectively, it is clear that a concluded bargainwas reached between BBG and CIT for CIT to pay for the earthworks for the followingreasons:(a) Mr Olliver was the sole director of both companies at the time theinvoices were issued.(b) CIT was immediately invoiced by BBG, even before the certificates ofpayment were received from Woods.(c) CIT did not reject the invoices and both BBG and CIT proceeded onthe basis they were correctly issued until the liquidators rejected theclaim in 2021.(d) There was no separate itemisation of earthworks completed on theproperties that were the subject of the sale and purchase agreementbetween BBG and CIT and earthworks on the residential properties, asone would have expected if BBG was undertaking the earthworks forits own benefit.31 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA).32 At [52], citing Boulder Consolidated Ltd v Tangaere [1980] 1 NZLR 560 (CA); Meates v Attorney-General [1983] NZLR 308 (CA) at 377.33 At [52], citing Canterbury FM Broadcasting Ltd v Daniels (1988) 2 NZBLC 103,535 at 103,541;Burrows Finn & Todd (eds) Law of Contract in New Zealand (2ed 2000) at [3.3.1].(e) The earthworks finished in August 2014, before the hearing of theapplication to remove the caveats in September 2014 and before thedecision was issued dismissing the application in December 2014. Ifthe earthworks were for BBG's advantage then one would haveexpected them to continue beyond August.(f) Mr Olliver's evidence was that "all we were looking to do wasimplement the original JV agreement".(g) Mr Olliver said several times in evidence that the earthworks were doneto make the properties more saleable to ensure BNZ was repaid,including in re-examination, when questioned about the benefits toBBG of the work done by JG Civil:A. I mean [BBG] had a condition (sic) agreement topurchase and if you want to get to the nub of it, I meanthe underlying driver was my determination to get –remember that you'll see from various valuations therethat the for sale valuation at the time wasn't overlyattractive to the bank and as a result, and we've provenwe did a lot better, but we were convinced that bysubdividing, doing the works, taking the rubbish off thesite, the unsuitables off the site and doing, selling sectionsthat ordinary people could buy rather than the developerwould more than pay the bank back in full. This was seenas the best way out and my sole motives were to get theBank of New Zealand's money back to them.(h) Finally, when Mr Olliver was asked in re-examination by counsel forthe liquidators whether CIT encouraged BBG to do the work, havingagreed that CIT did not engage JG Civil or ever agree to pay BBG, hisresponse was:A. Ah Q. Well (inaudible 11:11:08) Well –A. I mean I think the correct question there it comes backto what I was saying before, I was personally drivento do whatever I could to get the bank's money back,and clearly there's a conflict there. However, CITbenefitted from paying back its debts, which itwouldn't have otherwise been able to do.[103] In my view, based on all of the above, there was objectively a concludedcontract between BBG and CIT for CIT to pay for the works.[104] Counsel for the liquidators submitted that the fact that there was an entireagreement clause in the sale and purchase agreement between BBG and CIT precludedsuch an argument. But now that it is clear that the sale and purchase agreement doesnot relate to all of the properties on which earthworks were undertaken, thissubmission loses force.[105] Furthermore, the sale and purchase agreement named the purchaser as BBG"and/or nominee" so it is unsurprising that it was agreed on an "as is where is" basis,the vendor had no obligation to remediate and there was an "entire agreement" clause.Mr Olliver made it clear in evidence that the sole motivation was to repay the bankand that the earthworks were to make the land more saleable. For BBG to fund thepurchase, it would have needed to find purchasers for the sections so the bank couldbe repaid and agree to remove its caveat (assuming Glover No.2's caveats were alsoremoved). These terms in the sale and purchase agreement do not, therefore, precludea contract between BBG and CIT in regard to the earthworks.[106] It is useful to go back to the CIT liquidators' email confirming rejection ofBBG's claim:BBG undertook work, knowing that they ran the risk of not receiving anyreward (should the condition not be fulfilled), and without any agreement fromCIT that the work should be undertaken or that BBG would be compensatedfor the work. There is no basis for a claim.[107] It is clear that the above is not supported by the evidence both because the saleand purchase agreement entered into by BBG was not in respect of all the propertieson which earthworks were undertaken and because there was an agreement for CIT topay for those earthworks when viewed objectively. In these circumstances thedecision by the liquidators to reject BBG's claim is a decision that no reasonableliquidator could have come to and must be reversed.Result[108] Leave is granted to BBG as a creditor to apply for an order pursuant to s284(1)(b) of the Companies Act 1993 against the liquidators of CIT.[109] The application for an order reversing the liquidators' decision to reject BBG'sclaim in the liquidation is granted so that BBG's claim in the liquidation of CIT in thesum of $836,012.06 is accepted.Costs[110] The parties did not make submissions on costs but my preliminary view is thatBBG as the successful party is entitled to costs and that 2B costs are appropriate.[111] I record that reg 16 of the Companies Act 1993 Liquidation Regulationsprovides that where a creditor makes an application under s 284(1(b) in opposition tothe liquidator's rejection of a claim, the Court has a discretion as to whether thecreditor's costs in respect of that application should be:(a) added to the claim; or(b) paid out of the company's assets as an expense of the liquidation; or(c) paid personally by a party to the proceedings (other than the liquidator).[112] I encourage the parties to confer on costs and attempt to reach agreement. Ifthat is not possible, brief memoranda may be filed on behalf of the applicant within20 working days and on behalf of the defendant within 30 working days.____________________________Associate Judge Sussock