COMMISSIONER OF INLAND REVENUE V COMPUDIGM INTERNATIONAL LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) HC WN CIV-2008-485-1000

COMMISSIONER OF INLAND REVENUE V COMPUDIGM INTERNATIONAL LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) HC WN CIV-2008-485-1000 21 September 2010IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2008-485-1000AND BETWEEN COMMISSIONER OF INLAND REVENUE Plaintiff AND COMPUDIGM INTERNATIONAL LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) Defendant Hearing: 15 September 2010 Appearances: L. Theron - Counsel for Applicant, Andrew John Cardno T. Smith - Counsel for Respondent, Bally Technologies Judgment: 21 September 2010 at 3.00 pmJUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLThis judgment is delivered by Associate Judge Gendall on 21 September 2010 at 3.00 pm under r 11.5 of the High Court Rules.Solicitors: Terry IP, Solicitors, PO Box 10 932, Wellington 6143 Chapman Tripp, Solicitors, PO Box 993, Wellington 6140Introduction[1] The defendant in this proceeding, Compudigm International Limited (in receivership and in liquidation) ("Compudigm"), a company incorporated in New Zealand, was placed into liquidation by this Court on 30 June 2008. [2] The applicant, Andrew John Cardno ("Mr Cardno"), seeks leave pursuant to s 248 of the Companies Act 1993, a New Zealand statute, to continue proceedings he has filed in the District Court of Clark County in Nevada, the United States of America, against his former employer, Compudigm. Section 248(1)(c)(i) provides that, with effect from the commencement of the liquidation of a company, unless the liquidator agrees or the Court orders otherwise, a person must not commence or continue legal proceedings against the company or in relation to its property. [3] The present application is opposed by the respondent, Bally Technologies Inc ("Bally"). Bally was granted leave to intervene and be heard in opposition to the present application on 6 September 2010. Bally is a third party to the Nevada proceedings brought by Mr Cardno against Compudigm.Background[4] Mr Cardno is a former employee of Compudigm, a company which specialised in business intelligence technology. In 2001, Compudigm progressively moved its primary place of business from New Zealand to Las Vegas in Nevada. Mr Cardno relocated to Las Vegas in 2001. An employment contract between Compudigm and Mr Cardno was signed in early 2007. The contract included a choice of law clause nominating Nevada law as the law applicable to the contract. [5] During his time at Compudigm, Mr Cardno invented a number of technologies. One of these inventions was described as the "seePOWER" technology, a data visualisation technology that can be employed in various industries. In 2007, Mr Cardno was suspended from his role as Chief Executive Officer of Compudigm following a dispute with the company. On 31 March 2008, Compudigm was placed into receivership and, as I have noted, on 30 June 2008, the company was placed into liquidation by this Court.[6] Mr Cardno filed proceedings against Compudigm in the District Court of Clark County in Las Vegas in December 2009 ("the Nevada proceedings"). The proceedings appear to involve a number of causes of action, including claims for declarations as to the ownership of intellectual property, breach of contract, breach of good faith and fair dealing, violations of a Nevada statute, defamation and fraud. The main focus of Mr Cardno's claims, however, seems to be his allegation that he is entitled to the intellectual property rights in his inventions. [7] After Mr Cardno had been suspended from his position at Compudigm, the company purported to sell the intellectual property rights to Bally. Mr Cardno alleges that Bally was aware throughout of his dispute with Compudigm. Bally claims that there were three relevant transactions. It alleges that, in October 2007, it entered into an agreement with Compudigm to purchase the seePOWER technology for gaming, and that it purchased additional rights in March 20008. Bally further maintains that, when Compudigm was placed into liquidation by the Commissioner of Inland Revenue in June 2008, it purchased the remaining interest in the patents for an additional $150,000.00, with the liquidators' consent. Bally has joined the Nevada proceedings and alleges that it is the true owner of the intellectual property. [8] In May 2008, Bally brought an application against Mr Cardno in the Intellectual Property Office of New Zealand pursuant to s 65 of the Patents Act 1953 (New Zealand), seeking assignment of Mr Cardno's patents to Bally. A challenge by Mr Cardno as to Bally's standing to bring the application was dismissed by the High Court on 3 December 2009. As I understand it, that substantive application remains unresolved. [9] The present application before this Court is the result of concerns held by the Nevada Court as to whether the Nevada proceedings could only go ahead with the consent of the liquidators or an order of the High Court of New Zealand. When Mr Cardno sought the liquidators' consent to the Nevada proceedings, the liquidators responded, by letter on 14 May 2010, that the liquidators would consent to the proceedings on a number of conditions. These conditions included that the Nevada Court be made aware of the fact that the liquidators have no ability to defend theproceedings; that no quantum of damages be sought so as not to prejudice the other creditors; and that Mr Cardno not seek costs against the company or the liquidators. [10] A revised response from the liquidators was then provided in a letter to the Nevada Court on 22 July 2010. That letter stated that the liquidators would not consent to any proceedings that would add to the company's liabilities, and that they would not consent to any action that could have the effect of interfering with the sale of company assets where that interference could either detrimentally affect the realisations in the receivership or liquidation, or add to the liabilities of the company. In an email dated 27 July 2010, the liquidators wrote that their primary concern was to protect the interests of the pool of creditors in the liquidation of Compudigm, in a manner that would not restrict third parties from exercising their legitimate rights. [11] Finally, in a letter to Ms Theron, counsel for Mr Cardno, dated 11 August 2010, the liquidators concluded that they neither supported nor opposed Mr Cardno's application for leave, and that they would consider "that it is appropriate for the Court to determine the question of whether Mr Cardno should be permitted to continue the Nevada proceedings". [12] On 29 July 2010, the Nevada Court ordered that Mr Cardno's proceedings will be dismissed unless a New Zealand Court order is obtained granting leave to continue the proceeding within 60 days (by 30 September). The Judge stated that he was uncomfortable with the liquidators' letters and emails, and that it was necessary to obtain an order from the Court stating that the proceeding would not have an impact on the liquidation of Compudigm in New Zealand.Counsel's Submissions and My Decision[13] The present case is unusual in that both parties appear to accept that s 248(1)(c)(i) of the Companies Act 1993, the New Zealand provision, does not apply to foreign proceedings. The section provides that, with effect from the commencement of the liquidation of a company, unless the liquidator agrees or the Court orders otherwise, a person must not commence or continue legal proceedings against the company or in relation to its property. The commentary in BrookersInsolvency Law & Practice states however that the section "will not apply to legal proceedings taken in a foreign Court", referring to Re Vocalion (Foreign) Ltd [1932] All ER 519. Neither Mr Cardno nor Bally contend that the section must be interpreted as having wider application. [14] In my view, this conclusion is undoubtedly correct. A Court should be slow to infer, in the absence of express words to the contrary, that a legislative provision is of extraterritorial effect. This was made clear in the recent New Zealand decision in Poynter v Commerce Commission [2010] 3 NZLR 300, [2010] NZSC 38, where the Supreme Court held that extraterritorial effect needed to be provided for in express terms, or alternatively had to be signalled by necessary, as opposed to reasonable, implication (see [15], [46] and [78]). [15] In the preliminary proceedings before the Nevada Court, however, it was assumed that this Court did have jurisdiction under s 248(1)(c), Companies Act 1993, with the result that Mr Cardno now feels compelled to bring the present application so as to be able to continue the Nevada proceedings and satisfy the Nevada Court that those proceedings would not unduly interfere with the liquidation of Compudigm in this country. Acknowledging the jurisdictional limitations of the section, Ms Theron for Mr Cardno urged me to grant leave "so far as necessary", and Mr Smith for Bally submitted that it was appropriate for this Court "to provide the Nevada Court with guidance". [16] Before me, both parties were of the view that the most appropriate approach in the circumstances would be to apply s 248 and determine the application on the merits as if this Court had jurisdiction to do so. Ms Theron submits that dismissal of Mr Cardno's application on jurisdictional grounds would unduly prejudice Mr Cardno's rights with respect to the Nevada proceedings, given that the Nevada Court insisted that a New Zealand decision granting leave be obtained. Mr Smith for Bally submits that I should refuse leave to continue the Nevada proceedings, or alternatively provide reasons that will assist the Nevada Court with respect to the New Zealand law on applications of this nature.[17] Mr Smith also places some reliance on what he submits is the equitable jurisdiction of the Court to restrain foreign proceedings that would have the effect of interfering with the course of a New Zealand liquidation. In Bloom and others v Harms Offshore AHT "Taurus" GmbH & Co KG [2010] 2 WLR 349, the English Court of Appeal held that courts had jurisdiction to protect the assets of a company in administration from foreign attachments and executions by granting an injunction restraining foreign proceedings. In that case, the foreign proceedings were brought in New York by two German creditors of an English company which had entered administration pursuant to an order of the High Court. The claim was made without notice to the administrators, and the New York Court was unaware of the administration order. When the administrators made a substantial payment to a creditor of the company in New York, the funds were attached, and the administrators applied to the English Court for relief. [18] The English Court of Appeal noted there that "[i]t has long been established that the statutory prohibition against creditors bringing proceedings against a company being wound up by the court is not extraterritorial" (at [16]). The Court also held, however, that the jurisdiction of the court was not restricted by the territoriality of the statutory prohibition, and that there was jurisdiction to prevent a creditor from taking advantage of a foreign attachment. The exercise of the jurisdiction will depend on the facts of the case, and must be tempered by considerations of comity (at [25]). The Court emphasised, by quoting Millet LJ inMitchell v Carter [1997] 1 BCL 673 at 687, that:There must be a good reason why the decision to stop foreign proceeds should be made here rather than there. The normal assumption is that the foreign judge is the person best qualified to decide if the proceedings in his court should be allowed to continue. Comity demands a policy of non-intervention.[19] Despite this strong presumption to the contrary, however, the Court of Appeal in Bloom was satisfied that the conduct of the creditors, and the circumstances of the attachment of the property, justified the grant of an injunction in that case:[27] The Court should exercise its powers so as to enable the administrators to exercise their statutory functions and to fulfil their statutory duties, so far as necessary in any particular case. The comity owed by the courts of different jurisdictions to eachother will normally make it inappropriate for the Court to grant injunctive relief affecting procedures in a court of foreign jurisdiction. In this particular case, this Court recognises that the Bankruptcy and District Courts are experienced in commercial and insolvency matters. Nonetheless, the conduct of the creditor against whom an injunction is sought, and the circumstances of the attachment of the property of the company, may justify the grant of an injunction despite the strong presumption that this court will not interfere with the proceedings of a foreign court. In particular, if the conduct of the creditor can be castigated as oppressive or vexatious (as to which see the judgment of Glidewell LJ, with whom the other members of the Court of Appeal agreed, in Barclays Bank v Homan [1993] BCLC 680) or otherwise unfair or improper, this Court can and should grant relief in order to protect the performance by administrators of their functions and duties, and thus the creditors of the company, pursuant to orders of the Court.[20] There, Stanley Burnton LJ noted as relevant factors that the creditor companies had failed to inform the New York Court of the fact that the company was in administration or that they were bound by arbitration agreements; that the creditor companies "established a trap" for the administrators and conducted themselves in an unconscionable manner; and that the attachments directly interfered with the performance by the administrators of their functions and duties (at [28]). Overall, the Court concluded that the "conduct of the creditor companies and the circumstances of the attachments brought it into the exceptional category in which the grant of injunctive relief is justified, notwithstanding comity..." (at [29]). The order was limited to the release from attachment of payments which were made before the date on which the administrators were on notice of the orders made by the New York Court. [21] Although Mr Smith for Bally acknowledges here that there is an assumption that the foreign judge is the person best qualified to decide if the proceedings in his or her court should be allowed to continue, he submits that the Nevada Court has, as a matter of comity, provided Mr Cardno with the opportunity of referring the issue to the New Zealand Court, and that it would thus be appropriate to respond to the concerns expressed by the Nevada Court. I do not understand Mr Smith to submit that, given the lack of jurisdiction under s 248, Companies Act 1993 this Court should now be prepared to exercise its equitable jurisdiction and order an anti-suit injunction to prevent Mr Cardno from pursuing the Nevada proceedings. Instead, Mr Smith proposes that this Court make its views known to the Nevada Court as to the appropriateness of the Nevada proceedings continuing in light of the liquidation of Compudigm in this country.[22] At the hearing of his matter, Mr Smith did assert, however, that Mr Cardno's conduct in bringing his claim in Nevada could be described as improper, and that a "natural inference" might be drawn that Mr Cardno was attempting to obtain "a quick default judgment" in Nevada. I need to record at this point that I do not accept this assertion. On the evidence currently before me, I reject the suggestion that Mr Cardno's conduct is in any way comparable to that of the creditor companies inBloom, whose claim had no real link to New York and who actively sought to set a trap for the administrators. Mr Cardno's decision to bring proceedings in Nevada appears to have been made on the basis that Nevada would be the appropriate forum for the claim. His employment contract with Compudigm was entered into in Nevada and significantly, it contained a choice of law clause for Nevada law. And, the events that gave rise to the dispute occurred in Nevada. It also seems irrelevant to me in this context that Mr Cardno failed to join Bally as a party to the Nevada proceedings and opposed Bally's application for joinder. [23] In my view, therefore, the Nevada proceedings were not a blatant attempt - as in Bloom - to undermine the liquidation in New Zealand and gain an advantage over other creditors. The liquidators are now clearly aware of the existence of the proceedings in Nevada, and the Nevada Court has obviously been informed of the liquidation here. Although it was not raised as such in argument, I conclude that this case is not in the exceptional category of cases in which the grant of injunctive relief would have been justified. [24] In addition to the reasons already outlined above, I need to mention also that it would seem that the granting of an anti-suit injunction would unnecessarily undermine the operation of the Model Law on Cross-border Insolvency by the United Nations Commission on International Trade Law (UNCITRAL) ("the Model Law"), which was enacted by the United States of America in Chapter 15 of the United States Bankruptcy Code. The Model Law was not referred to by either party in submissions, so I refrain from reaching a definite conclusion as to its applicability here. Nevertheless, it seems significant that the Model Law provides for mandatory recognition of foreign insolvency proceedings, with the effect that under certain circumstances, individual actions or proceedings concerning the debtor's assets, rights, obligations or liabilities are stayed automatically (art 20). The scope, ormodification or termination, of the stay is subject to any provisions of law of the enacting State relating to insolvency. Additional relief to protect the assets of the debtor or the interests of the creditor may be granted pursuant to art 21. [25] The Model Law provides that it is the role of the "foreign representative" to apply for recognition of the insolvency proceedings and, if necessary, to apply for relief. The term "foreign representative" is defined as "a person or body, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor's assets or affairs or to act as a representative of the foreign proceeding". The "foreign representative" in the present case would, therefore, appear to be the liquidator of Compudigm. Having regard to the letters that were provided to the Nevada Court, it would appear that the liquidators have not yet applied for recognition of the liquidation proceedings in Nevada. [26] More importantly, however, the automatic consequences envisaged in art 20 are to be imposed by the enacting State (here the United States of America) in accordance with art 20 and the law of the enacting State. It must follow that New Zealand law would appear to be of little relevance in this context. This is clarified in the UNCITRAL Guide to Enactment, which states as follows:143. The automatic consequences envisaged in article 20 are necessary to allow steps to be taken to organize an orderly and fair cross-border insolvency proceeding. In order to achieve those benefits, it is justified to impose on the insolvent debtor the consequences of article 20 in the enacting State (i.e. the country where it maintains a limited business presence), even if the State where the centre of the debtor's main interests is situated poses different (possibly less stringent) conditions for the commencement of insolvency proceedings or even if the automatic effects of the insolvency proceeding in the country of origin are different from the effects of article 20 in the enacting State. This approach reflects a basic principle underlying the Model Law according to which recognition of foreign proceedings by the court of the enacting State grants effects that are considered necessary for an orderly and fair conduct of a cross-border insolvency. Recognition, therefore, has its own effects rather than importing the consequences of the foreign law into the insolvency system of the enacting State. If recognition should in a given case produce results that would be contrary to the legitimate interests of an interested party, including the debtor, the law of the enacting State should provide possibilities for protecting those interests, as indicated in article 20, paragraph 2 (and discussed in paragraph 149 below). ... 148. Notwithstanding the "automatic" or "mandatory" nature of the effects under article 20, it is expressly provided that the scope of those effects depends on exceptions or limitations that may exist in the law of the enacting State. Those exceptions may be, for example, the enforcement of claims by secured creditors,payments by the debtor in the ordinary course of business, initiation of court action for claims that have arisen after the commencement of the insolvency proceeding (or after recognition of a foreign main proceeding), or completion of open financial- market transactions. 149. Sometimes it may be desirable for the court to modify or terminate the effects of article 20. The rules governing the power of the court to do so vary. In some legal systems the courts are authorized to make individual exceptions upon request by an interested party, under conditions prescribed by local law, while in others the courts do not have that power, in line with the principle that, in general, courts do not have the power to set aside the application of a statutory rule of law. If courts are to be given such a power, some legal systems would normally require setting out grounds on which the court could modify or terminate the mandatory effects of recognition under article 20, paragraph 1. In view of that situation, article 20, paragraph 2, provides that the modification or termination of the stay and the suspension provided in the article is subject to the provisions of law of the enacting State relating to insolvency. (emphasis added)[27] It is interesting to note that art 20(2) of Schedule 1 of the Insolvency (Cross- border) Act 2006, which of course adopts the Model Law here in New Zealand, does not refer to any provisions of law relating to insolvency that would be applicable in respect of the exceptions, limitations, modifications or termination of the stay. Instead, para (2) states as follows:Paragraph (1) of this article does not prevent the Court, on the application of any creditor or interested person, from making an order, subject to such conditions as the Court thinks fit, that the stay or suspension does not apply in respect of any particular action or proceeding, execution, or disposal of assets.[28] It seems that some case law will be required to determine the operation of para (2), and whether the principles applicable under s 284(1)(c)(i) Companies Act 1993 will simply be "imported" into the Schedule. [29] The potential application of the Model Law is relevant here in two respects. First, it seems that it would be inappropriate to make an order as to the "legitimacy" of the Nevada proceedings, whether under s 248 Companies Act 1993 or in equity, if under the uniform approach adopted by the Model Law this matter should be determined by the Court that is seized of the proceedings. I agree, therefore, with the comment made by Look Chan Ho in Anti-Suit Injunctions in Cross-Border Insolvency: A Restatement (2003) 52(3) ICLQ 697 at 733-734, that "under the cooperative environment created by the Model Law, it is inappropriate for an English court to issue anti-suit injunctions to halt proceedings in a foreign courtbound by the Model Law". The right course of action in this context would be for the representative of the insolvency proceeding to apply to the foreign court for relief. [30] This was not, of course, the approach that was taken in Bloom. Interestingly, the administrators in that case did seek relief in the New York bankruptcy court, in the form of an order vacating the attachments obtained by the creditors pursuant to Chapter 15 of the United States Bankruptcy Code. However, it appears that this application was brought after the administrators had sought relief from the English High Court. The Court of Appeal commented at [31] that:... administrators should be aware that the jurisdiction of the district court to attach payments in dollars cleared through New York may mean that they will be unable safely to make dollar payments in respect of post-administration liabilities without first having obtained recognition of the administration as a "foreign proceeding" under Chapter 15 of the United States Bankruptcy Code.[31] It may be that the need for urgent relief in Bloom, necessitated by the conduct of the creditor companies, made the granting of an injunction appropriate in that case. Here, the Nevada Court is obviously aware of the liquidation proceedings and prepared to take action if necessary. [32] Secondly, the fact that the Model Law is likely to be applicable here would seem to have implications for the present request from the parties that I provide "guidance" to the Nevada Court as to the New Zealand position on the Nevada proceedings. I repeat the comments made in the UNCITRAL Guide to Enactmentthat recognition of insolvency proceedings "has its own effects rather than importing the consequences of the foreign law into the insolvency system of the enacting State"; and that the scope of the effects under art 20 "depends on exceptions or limitations that may exist in the law of the enacting State". It is questionable, therefore, whether a discussion and application of the test that would ordinarily apply under s 248 Companies Act 1993 would be of any assistance here. [33] I should note again that I have received no submissions from the parties as to the possible application of Chapter 15 of the United States Bankruptcy Code to the present application. However, even if the Model Law is not applicable, and the Nevada Court would not resort to art 20 in order to stay the proceedings in supportof the New Zealand liquidation, I would be hesitant to provide an assessment of how this application would have been determined in a domestic context. Ultimately, the question of whether the Nevada proceedings should be stayed is a matter for the Nevada Court. The statutory prohibition under s 248 Companies Act 1993 does not apply to foreign proceedings, and there are no grounds for an anti-suit injunction. [34] However, given that the Nevada Court may have expressed a certain interest in the New Zealand position, I will make some brief observations with respect to the legal principles that would have been applicable under s 248 Companies Act 1993. I do so because the Nevada Court has indicated that this may be of some assistance to it in its decision whether to stay the Nevada proceedings. My observations should not, therefore, be understood as an attempt to interfere with the Court's exercise of its jurisdiction, or as an indication that New Zealand law might in any way be relevant to that exercise. [35] Brookers Company and Securities Law at para CA248.03 sets out certain general principles by way of introduction to s 248(1)(c) Companies Act 1993 in this way:Section 248(1)(c) represents one of the cornerstones of the liquidation process. The race that has been run between creditors for repayment by the company of its debts and its assets is brought to an end by liquidation. Thereafter, an unsecured creditor's rights of recourse against a company and its assets (with or without the help of the Courts) may only be pursued with the leave of the Court or with the permission of the liquidator: see CIR v H & P Development Ltd 29/11/06, Associate Judge Gendall, HC Wellington CIV-2006-485-2222.[36] The factors relevant to the exercise of the Court's discretion under s 248 centre around the question of whether any circumstances exist which render it necessary that the legal proceedings should continue, or whether the plaintiff's claim is not one that can easily be dealt with in the liquidation: see, for example, Hook v Gulf Harbour Development Limited HC Auckland CIV-2002-404-1931, 23 November 2005 at [58]. In Fisher v Isbey (1999) 13 PRNZ 182, Master Faire summarised the following factors that have been held to be applicable to the exercise of the discretion to allow proceedings to continue:(a) It is a cardinal principle that there must be equality among various creditors: Steel & Tube Co of NZ Ltd v Barker & Pollock Ltd and JBL Sargent Construction Ltd [1973] 2 NZLR 30, 32; (b) It follows that the bringing of proceedings should not produce an advantage to a particular creditor over other creditors: Langley Constructions (Brixham) Ltd v Wells [1969] 1 WLR 503; [1969] 2 All ER 46 (CA); (c) The assets of a company should not be dissipated in wasteful litigation particularly if there is a more convenient method for determining the claim: McPhail v Durbridge Developments Ltd (in liq) (1998) 8 NZCLC 261,610, 261,262; (d) The onus is on the party seeking leave to satisfy the Court that leave should be given: McPhail v Durbridge Developments Ltd (in liq)(supra); (e) There is a difference of legal opinion as to the test to be applied. The first position is that the application must show that there is a serious question to be tried. The second position is that the claim should not be clearly unsustainable but the Court will not investigate the merits of the claim; (f) The Court must determine whether the procedure for determining creditors' claims provided in s 302 and [the] following [sections] of the Companies Act 1993, and the Court's power of review pursuant to s 284(1)(b) of the Companies Act 1993, is appropriate and if not whether the claims should be established in civil proceedings commenced by leave under s 248 of the Companies Act 1993: Pacific Produce Co Ltd v Franklin Coop Growers Ltd (in liq) [1969] NZLR 65 (CA); Loyal Ltd v Standard Tobacco Co Ltd (in liq) [1935] NZLR 83.[37] Additional considerations are whether the proceedings sought to be commenced, even if successful, are likely to be fruitless (see Johnson v CBD Real Estate Ltd (in liq) (1999) 14 PRNZ 320 at 322), and whether there has been delay by the applicant (McPhail v Durbridge Developments Ltd (in liq) (1998) 8 NZCLC 261,610). [38] Ms Theron for Mr Cardno further refers to [11] of Fisher v Isbey, where the Court stated that a "beneficiary seeking the trust property is not a creditor as such", submitting that the Companies Act 1993 procedures are not appropriate for determining proprietary claims. Ms Theron accordingly argues that, to the extent that Mr Cardno's proceedings claim an ownership interest in intellectual property, he is not a creditor and there is no question of Mr Cardno seeking to prove in the liquidation before seeking leave to continue the proceedings. Similarly, inCommonwealth v Davis Samuel (2008) 68 ACSR 336, the Court stated that where an applicant seeks to recover his or her own property from the company, the court will normally grant leave as of right, because such a claim cannot be accommodated within the regime relating to proofs of debt (at [34]-[35]). In my view, this approach has considerable merit. [39] Ms Theron also submits that Mr Cardno's proceedings will not be fruitless, because the claim to declarations as to ownership means that the extent to which there are funds remaining at the conclusion of the liquidation is irrelevant. Moreover, a letter was provided by the liquidators of Compudigm indicating that there may be some funds available for the benefit of unsecured creditors. Mr Smith for Bally in response submits that the liquidators' view is "speculative at best", and that there are presently no funds to meet any judgment for damages. [40] Mr Smith also submits that Mr Cardno's application for declarations as to intellectual property rights is of no utility where legal rights in the property have been transferred to Bally as a bone fide purchaser for value. I agree with Ms Theron's submission however that this issue would be a matter for trial. Mr Smith further submits that Mr Cardno's proceedings effectively seek to rescind the sale in liquidation of certain of Compudigm's patent assets, and that Mr Cardno should have sought instead to review the liquidators' decision to agree to a sale of the assets to Bally rather than instituting the Nevada proceedings. Mr Smith argues that these proceedings are a "collateral attack" on the conduct of the receivers and liquidators of Compudigm. [41] Ms Theron in turn responds with the contention that these allegations are based on factual errors, and that the ability of Compudigm to transfer title in these assets to Bally is one of the issues that should be properly tested in the Nevada Court. In my view, the Nevada proceedings could not properly be described as a "collateral attack", and it would be beneficial to resolve Mr Cardno's and Bally's respective entitlements to the intellectual property in court. I also note, however, that Mr Cardno's claim would appear to have a direct effect on the available assets or existing liabilities of Compudigm, insofar as it seeks to undo the sales of intellectual property to Bally.[42] Given that Mr Cardno's claims are, to a large extent, proprietary, I would have been inclined to grant leave under s 248(1)(c)(i) Companies Act 1993 on that basis. It is unlikely that Mr Cardno's claim could be considered as a normal Proof of Debt claim in the liquidation, as it involves a number of causes of action and potentially complex legal issues. There appears to be no other more convenient method to determine Mr Cardno's claim. I also agree with Ms Theron's submissions that mere delay should not be a basis for preventing Mr Cardno from seeking to enforce his rights here, and that the claim is not clearly unsustainable or fruitless. The claim would seem to have some effect on the liquidation, but overall, it appears that any interference with the liquidation which may occur in this case would not be sufficient to prevent Mr Cardno from pursuing a legitimate claim against Compudigm.Conclusion[43] For these reasons, I conclude that this Court does not have jurisdiction under s 248 Companies Act 1993 to determine whether the Nevada proceedings should continue, and that there are no grounds for otherwise restraining Mr Cardno from pursuing the proceedings. The question of whether Mr Cardno's proceedings are properly brought is a matter for the Nevada Court entirely. Some wider issues were raised in argument regarding the question of whether Nevada is the appropriate forum for this case, and whether the Nevada proceedings would interfere with Bally's application pursuant to s 65 of the Patents Act 1953 to the Intellectual Property Office of New Zealand. These matters were not properly before the Court and I express no view as to their potential effect on any jurisdictional determination by the Nevada Court. [44] Mr Cardno's application for leave pursuant to s 248(1)(c)(i) Companies Act 1993 to continue the Nevada proceedings is unnecessary here and is therefore dismissed on the basis that the statutory prohibition to commence or continue proceedings against a company in liquidation is not applicable to foreign proceedings, and there is therefore no jurisdiction to make the order sought. I conclude that in terms of New Zealand law, no consent of this Court is required for the Nevada proceedings to continue.[45] Costs on the application, and on Bally's application to be heard in opposition, are reserved. If counsel are unable to agree on the question, they may file memoranda sequentially and I will decide the issue on the basis of the material before the Court.'Associate Judge D.I. Gendall'