NOYCE v PARNELL PROPERTY INVESTMENTS LIMITED [2015] NZHC 2037

NOYCE v PARNELL PROPERTY INVESTMENTS LIMITED [2015] NZHC 2037 [27 August 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-004965[2015] NZHC 2037BETWEEN DIGBY JOHN NOYCE ASLIQUIDATOR OF PARNELLPROPERTY INVESTMENTS LIMITED(IN LIQUIDATION) AND ASLIQUIDATOR OF ST STEPHENSINVESTMENTS LIMITED (INLIQUIDATION)PlaintiffAND PARNELL PROPERTY INVESTMENTSLIMITEDFirst DefendantST STEPHENS INVESTMENTSLIMITEDSecond DefendantContinued Hearing: 23 to 27 March 2015Appearances: H L Thompson and J R Rutherford for the PlaintiffZ G Kennedy and N A Chamberlain for the Seventh DefendantP G Alexander in PersonJudgment: 27 August 2015JUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 27 August 2015 at 4:00 pm pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarSolicitors / Counsel / Parties:Mr H L Thompson, McMahon Butterworth Thompson, Solicitors, Auckland Mr Z G Kennedy and Ms N A Chamberlain, Minter Ellison, Solicitors, Auckland Mr P G AlexanderContinued AND PARNELL STORAGE & PARKING LIMITEDThird DefendantSECOND GENERATION LIMITEDFourth DefendantFIFER RESIDENTIAL LIMITEDFifth DefendantCOMPARK PROPERTIES LIMITEDSixth DefendantBANK OF NEW ZEALAND LIMITEDSeventh DefendantPAUL GRAEME ALEXANDEREighth Defendant[1] The plaintiff, Mr Noyce, is liquidator of Parnell Property Investments Ltd (Parnell) and St Stephens Investments Ltd (St Stephens). Mr Noyce seeks the following under the Companies Act 1993 (the Act):(a) An order pursuant to s 271(1)(b) that the assets and liabilities of Parnell and St Stephens be pooled.(b) Confirmation under s 284(1)(b) of decisions made by him in accepting proofs of debt, and of his proposed distribution to creditors.(c) Approval under s 284(1)(e) of his remuneration, and, an order that the costs of this application be treated as liquidation expenses.[2] Parnell and St Stephens are the first and second defendants because the pooling order is sought in respect of the assets and liabilities of those companies. The other defendants were named as defendants because they objected in variousways to Mr Noyce's proposed distribution of the net assets.[3] Notice of this proceeding was given to all other creditors of Parnell and St Stephens. None has taken part in this proceeding. The third and fourth defendants also have taken no part in this proceeding.[4] The eighth defendant, Mr Alexander, appeared on his own behalf and as assignee of the interests of the fifth defendant (Fifer) and the sixth defendant (Compark). References to Mr Alexander, or to Mr Alexander's claims orcontentions, will, in general, include the claims of Fifer and Compark. Mr Alexander opposes all of the orders sought by Mr Noyce. The opposition was substantially founded on his contention that the seventh defendant (BNZ), as a lender to Parnell and St Stephens, wrongfully transferred monies out of the joint bank account of Parnell and St Stephens, and caused various losses to interests related to Mr Alexander. He further contends that Mr Noyce wrongfully failed to pursue claims of Parnell and St Stephens against BNZ arising out of those allegedlywrongful acts. Mr Alexander also seeks an order that Fifer and Compark, as creditors of Parnell and St Stephens, are entitled to priority pursuant to s 1(1)(e) of Schedule 7 of the Act.[5] BNZ disputes all of Mr Alexander's allegations against it. It also opposes Mr Alexander's claim that Fifer and Compark are entitled to payment in priority to othercreditors. BNZ had opposed some distributions proposed by Mr Noyce, but now, for pragmatic reasons related to cost against benefit, supports all of Mr Noyce'sapplications.The facts[6] The issues arise out of a failed property investment by two groups I will referto as the "Alexander interests" and the "Sycamore interests". The Alexander interests are part of what may be called "the Alexander group": companies, of which there is a reasonably large number, and individuals, associated directly or indirectly with Mr Alexander. Mr Alexander, at all material times, was an undischarged bankrupt, being his second bankruptcy. The Sycamore interests were entities associated with Mr Alan Sycamore, and included the third and fourth defendants.[7] In 2006 the Alexander and Sycamore interests, acting through various structures, which structures distanced ultimate beneficiaries and actual control from legal ownership, bought a residential property in Parnell, Auckland (the property). Parnell and St Stephens took title as tenants in common in equal shares.[8] The sole director of Parnell and of St Stephens was Mr Stephen Osborn. The sole shareholder of each company was another company called Aries Holdings Limited (Aries), of which Mr Osborn was also sole director and sole shareholder. The evidence establishes that Mr Osborn was a close associate of Mr Alexander and that, at all material times, he acted on instructions from Mr Alexander.[9] In the absence of Mr Alexander's opposition, a decision on Mr Noyce'sapplication would have been straightforward because the grounds for the orders sought were well established on a prima facie basis. Given this opposition, and thefact that it is founded on Mr Alexander's contentions against BNZ, the factualnarrative required is one relating, in large measure, to the dealings between Mr Alexander and BNZ, the contractual arrangements entered into between BNZ and various companies in the Alexander group, and guarantees provided by MrAlexander's former wife and by Mr Alexander's close associate, Mr Osborn. The narrative that follows is taken, in large measure, from a narrative provided in opening submissions for BNZ. I am satisfied that it is accurate.The Alexander Group and BNZ[10] There is a long litigation history between BNZ and members of the Alexander group. These proceedings derived from of a number of loan facilities that BNZ provided to entities in the Alexander group. Two judgments in those proceedings provide additional relevant background, both in terms of factualnarratives and the substantive decisions.1[11] Companies in the Alexander Group, and related entities, of present relevance, included Proprius Holdings Limited (struck off and previously in liquidation) (Proprius), Fifer, Compark, St Stephens, Parnell, Aries (in liquidation), Original Car Warehouse 2003 Limited (in liquidation) (Original Car) and Marine Ambulance Services No.2 Limited (Marine).[12] Various entities within the Alexander group were interrelated by virtue of common shareholders (both legal and beneficial) and directors, cross-guarantees and account operating mandates.1 Parnell Property Investments Ltd & Ors v BNZ High Court, Auckland CIV-2010-404-007186, 28 February 2011 (Woolford J). This was a judgment on an unsuccessful application by Parnell, St Stephens and Mr Osborn for interim orders restraining BNZ from proceeding with a mortgagee sale, and other orders. Parnell Property Investments Ltd & Ors v Bank of New Zealand; Bank of New Zealand v Parnell Property Investments Ltd (in liquidation) & Ors [2012] NZHC 12 (Associate Judge Bell). This was a decision on two applications for summary judgment by BNZ, one as a plaintiff and one as a defendant, with Parnell, St Stephens, Fifer, MrOsborn, and Mrs Alexander being opposing, or formerly opposing, parties. The claims anddefences of Parnell and St Stephens were withdrawn following liquidation. There is a detailednarration of facts at [10]-[49]. A further judgment providing relevant background is Alexander vBNZ [2012] NZHC 3288 (adjudication of Mrs Alexander in bankruptcy).Management of Alexander Group accounts[13] Between 2003 and February 2008, requests for funding, negotiation of facilities, and the day to day management of the facilities held by the Alexander group with BNZ, predominantly involved Mr Alexander on behalf of the Alexander group and Ms Josephine Hart on behalf of BNZ.[14] Ms Hart occasionally met with Mr and Mrs Alexander together to discuss the banking accommodation required by the Alexander group. Ms Hart did not discuss financing of the Alexander group with Mr Osborn at any stage.Provision of the St Stephens Facility[15] The purchase of the property was initially funded by advances from companies associated with the Alexander and Sycamore interests and third party lenders. Mr Alexander had earlier approached BNZ for finance for the purchase. BNZ declined to provide finance at that stage.[16] In late 2006 Mr Alexander again approached Ms Hart to enquire whether BNZ would refinance the property. At that stage facilities BNZ had provided to Proprius and Fifer were in excess of the original agreed limits, albeit by arranged temporary overdraft. The Proprius account was in excess of its original limit by approximately $1m. The Fifer account was in excess of its original limit by approximately $330,000.[17] Ms Hart and Mr Alexander discussed a refinance of the property on the basis that, amongst other things, sufficient funds would be advanced also to repay the Proprius and Fifer overdrafts. Mr Alexander disputes this.[18] Ms Hart prepared a memorandum to the BNZ credit committee, dated 28 November 2006, asking for approval of a facility for $4.5 m to be provided to St Stephens and Parnell. The memorandum set out the purposes of the facility,including to repay the Proprius excess, to repay the Fifer excess, to "meet ongoing servicing commitments to the BNZ" and to "clear excesses" and "reduce facilities"across the Alexander Group. Based on the memorandum, BNZ agreed to provide a facility of $4.8m to Stephens and Parnell (St Stephens facility).[19] Around 28 November 2006 Ms Hart presented a letter of offer to Mr and Mrs Alexander for a number of facilities, including the St Stephens facility (28 November offer). The letter was directed to the directors of Proprius, Original Car, Compark, St Stephens and Parnell. The address for the directors is 43 St Stephens Avenue. This is the address of the property. Mr and Mrs Alexander were living in the house on the property.[20] Ms Hart talked through the specific terms and conditions of the offer and the basis on which it was being offered. This included repaying the Proprius excess and the Fifer excess and meeting ongoing servicing commitments to the BNZ. Mr and Mrs Alexander accepted the terms of the offer.[21] Ms Hart left the 28 November letter with Mr and Mrs Alexander. The letter had attached to it a form for written acceptance of the offer. This had to be signed on behalf of the companies concerned and also by Mrs Alexander and Mr Osborn as trustees of the Alexander family trust and an entity called the St Stephens Investment and Parnell Investment Trust. There was also advice that independent legal advice might be sought. The letter was returned to the bank with the acceptances signed on behalf of the companies and by Mrs Alexander and Mr Osborn. All signatures were dated 14 December 2006. All pages of the letter, the offer from BNZ as well as the acceptance pages, were initialled by Mrs Alexander and Mr Osborn. Mr Alexander contended that the acceptance was back dated and otherwise disputed Ms Hart'sevidence that there had been oral acceptance at a meeting with him and Mrs Alexander. There was an affidavit from Mrs Alexander filed in this proceeding. Notice had been given for her attendance for cross examination. She did not attend. Her evidence was accordingly ruled inadmissible.[22] The 28 November offer was followed by a formal letter of advice from BNZ, dated 26 February 2007 (26 February letter of advice). This was addressed to Parnell and St Stephens as a partnership. The letter of advice was signed by MrOsborn as director of Parnell and St Stephens, with Mr Osborn's signature witnessedby a solicitor.[23] Towards the end of March 2007 BNZ agreed to provide further funds. This was to clear a second mortgage over the property securing a sum of $540,000. BNZ had been unaware of this mortgage. In accordance with the banks usual practice a memorandum went to the credit committee on 30 March 2007 recording the terms for a further temporary facility. This was followed by a letter of offer (2 April offer). The addressees and address of the letter are the same as the addressees and the address for the 28 November offer. The 2 April offer in broad terms mirrors the 28 November offer apart from the additional facility. The 2 April offer was signed by Mrs Alexander and Mr Osborne in their various capacities. All of the signatures are witnessed and dated 14 April 2007. The written acceptance occurred following a discussion Ms Hart had with Mr and Mrs Alexander. As with the previous meeting, for the 28 November offer, Mr Osborn was not present. As with the 28 November offer Mr Alexander again contended that the acceptance signatures were procured some months after the date that appears on the document. The allegations of back dating, and more broadly the allegations of lack of agreement from Mr and Mrs Alexander in discussions with Ms Hart, were all rejected by Ms Hart.Transfers from the St Stephens and Parnell account with BNZ[24] On 30 April 2007, the St Stephens facility was drawn down to the joint account of St Stephens and Parnell and the following transfers were made out of it that day and on 1 May 2007:(a) $162,000 was transferred from the St Stephens facility to clear the Fifer overdraft.(b) $20,000 was transferred to clear the Original Car overdraft.(c) $204,000 was transferred to Ms Heather Le Gros in repayment of an advance she had made to Proprius to enable it to meet its GST liability.(d) $1.22m was transferred from the St Stephens facility to clear the Proprius overdraft.[25] The intergroup transfers, to Fifer, Original Car and Proprius, were made pursuant to the authority given by Mr Alexander as the authorised representative of the group generally and of Mr Osborn as the director of St Stephens and Parnell. They were also made pursuant to the authority given by Mrs Alexander who, with Mr Osborn, had independent signing authority on the joint account of Parnell and St Stephens. The third party payment of $204,000 to Ms Le Gros, was made in reliance on oral instructions followed by an email which on the face of it came from Mrs Alexander, the person with signing authority on the account. Mr Alexander'sevidence was that the email had in fact been sent by him, notwithstanding that it apparently came from Mrs Alexander, and he argued that it had no effect because he had no authority over the account. I come back to that argument below when discussing Mr Alexander's credibility.[26] The Alexander group subsequently claimed that all of these transfers were unauthorised. BNZ denies that the transfers were unauthorised. There is no record of the transfers being disputed until early April 2008. This occurred following default under the facilities and transfer of the Alexander files to BNZ's Strategic Services Division.Increases in temporary overdraft[27] Between May 2007 and November 2007 BNZ approved various extensions to a temporary overdraft on the St Stephens facility which amounted to $1.6m. In December 2007, BNZ converted the temporary overdraft into a facility for $1.8m for a term of two months. Mr Osborn signed the form of acceptance of this facility.Default by St Stephens and Parnell[28] In February 2008 St Stephens and Parnell defaulted under the $1.8m facility. Other defaults followed. BNZ made demand and issued Property Law Act notices In December 2010 Parnell, St Stephens and Mr Osborn issued injunctionproceedings against BNZ to restrain mortgagee sale of the property (the injunction proceeding).[29] The injunction application was heard by Woolford J on 11 February 2011. St Stephens had been placed into liquidation nine days earlier. Mr Noyce filed a notice of discontinuance. The injunction was pursued, at least nominally, by Parnell and Mr Osborn, but plainly directed by Mr Alexander Affidavit evidence for the plaintiffs came from Mr Osborn and Mr and Mrs Alexander. Although counsel appeared for the applicants, with solicitors on the record, it is apparent that at least the first affidavit of Mr Osborn was drafted by Mr Alexander. In a reserved judgment delivered on 28 November 2011 Woolford J dismissed the application.2[30] On 31 March 2011 Parnell was placed in liquidation following a shareholders special resolution.[31] In June 2011 BNZ commenced summary judgment proceedings against Parnell, St Stephens, Fifer, Mrs Alexander and Mr Osborn, seeking judgment against those parties as principal debtors or guarantors under the various facilities provided by BNZ. BNZ, as defendant in the injunction proceeding, also sought summary judgement in respect of substantive claims remaining in the injunction proceeding. The only active plaintiff remaining in that proceeding was Mr Osborn. There were claims that BNZ had caused losses alleged to be recoverable by Mr Osborn. It is unnecessary to go into the details. In broad terms the foundation for the claims was the same as the claims advanced by Mr Alexander in the present proceeding. BNZ sought summary judgment as a defendant against Mr Osborn, or an order striking outMr Osborn's claims.[32] Both of BNZ's summary judgment applications in the two proceedings, were heard together by Associate Judge Bell.3 The BNZ claim was not opposed by St Stephens and Parnell. The fact that Mr Noyce determined that the claims should notbe opposed is one of Mr Alexander's complaints against Mr Noyce. BNZ obtained an order for summary judgment against St Stephens and Parnell for $8,508,742.122 Parnell Property Investments Ltd v BNZ, High Court, Auckland CIV-2010-404-007186, above note 1.3 Parnell Property Investments Ltd v BNZ [2012] NZHC 12, and see above note 1.with interest and costs. The amount of the judgment excludes a sum claimed by BNZ of $1.606m, being the total of the four sums transferred by BNZ on 30 April and 1 May 2007 and alleged by Mr Alexander to have been unauthorised transfers. This amount was excluded from the judgment because there was some evidence in support of the allegation sufficient to exclude this amount on conventional grounds on a summary judgment application.[33] The summary judgment claim was opposed by Fifer, Mrs Alexander (in her personal capacity and as trustee of the Alexander Family Trust) and Mr Osborn as trustee of the Alexander Family Trust. The Associate Judge granted summary judgment against Mrs Alexander personally and Mr Osborn and Mr Alexander as trustees of the Alexander Trust for $5,460,158.99. The judgment against Mrs Alexander and Mr Osborn excluded the total of the allegedly unauthorised transfers of $1. 606m, for the reasons just noted.[34] The contention that the transfers were unauthorised also went to liability for sums claimed by Mr Osborn in the injunction proceeding and on which claims BNZsought defendant's judgment or strike out. The Associate Judge considered liability for these sums on the assumption that the transfers were not authorised. He nevertheless recorded observations on the question whether the transfers were authorised.4 I will not summarise the Judges observations. In anticipation of my own conclusions I nevertheless record at this point that, having now presided over a defended hearing for five days, with cross examination of witnesses, I am satisfied that the Judges tentative conclusions were correct.[35] In the BNZ claim, BNZ also sought summary judgment for vacant possession of the property occupied by Mr and Mrs Alexander. There was, on the face of it, a lease from St Stephens and Parnell to Fifer, expiring in April 2016 if a right of renewal was exercised. Fifer did not pay any rent. BNZ gave notice to Fifer under the Residential Tenancies Act 1986, relying on ss 51 and 58. Fifer's response was that it was not a residential tenancy on the basis that the premises were used for both residential and commercial purposes. BNZ then contended that it was entitled to sell as mortgagee with priority over an unregistered lease. Fifer's response to that was to4 Parnell Property Investments Ltd v BNZ [2012] NZHC 12 at [50]-[63].produce what it asserted, through an affidavit of Mrs Alexander, was a consent from BNZ to the lease to Fifer. BNZ contended that the letter was not genuine. Given the nature of the proceeding the Associate Judge was not able to resolve that issue. He allocated a date for trial to determine the authenticity of the letter. On the day before the trial Fifer, Mrs Alexander and Mr Osborn withdrew their defence. BNZ obtained orders for vacant possession by consent.[36] The authenticity of the purported letter from BNZ, was directly in issue before me. The BNZ letter, on the face of it, was signed by Ms Hart on behalf of thebank. Ms Hart's evidence was that the letter was not genuine. She provided detailed evidence supporting her contentions on a number of grounds. It is unnecessary to summarise her evidence because there was no effective challenge to it and I accept it. In addition, there was unchallenged evidence from a document examiner for the New Zealand Police. She is qualified as an expert in the examination of questioned documents and the identification of handwriting and signatures. Her evidence was unchallenged. It confirms that the document relied on in a direct sense by Mrs Alexander, and indirectly by Mr Alexander, was a forgery.[37] BNZ filed bankruptcy proceedings against Mrs Alexander. After a defended hearing, Lang J adjudicated Mrs Alexander bankrupt.5Mortgagee sale of the property[38] BNZ proceeded to a mortgagee sale of the property. It accepted an offer of $4,562,000 with a deposit of $438,000. This was the highest tender price received and significantly above the forced sale value of the property as estimated by a registered valuer.Proof of debt forms in the liquidations[39] BNZ subsequently filed an updated proof of debt form in the liquidations of St Stephens and Parnell to take into account the proceeds it received from the sale of the property. BNZ claimed a debt of $6,613,436 in the liquidations.5 Re Alexander: Alexander v BNZ, above n 1.The issues[40] The issues, in the order I will deal with them, and the protagonists in respect of those issues, are as follows:Issue 1: Did the liquidator act reasonably in accepting BNZ's claim as acreditor? Mr Noyce maintains that he was justified in acceptingBNZ's claim, and in the amount claimed, but the main protagonists in this regard are BNZ and Mr Alexander.Issue 2: Should the assets and liabilities of St Stephens and Parnell be pooled? The only challenge to this application is from Mr Alexander.Issue 3: Was Mr Noyce justified in accepting the claims by the Sycamore associated companies, the third and fourth defendants? The basis forMr Alexander's argument is the same as that for his opposition to pooling.Issue 4: Is Mr Alexander correct in his argument that Fifer and Compark are entitled to payment in the liquidation of Parnell in priority to other creditors?Issue 5: The final issue is whether the remuneration Mr Noyce seeks is reasonable, with the related question of costs for this proceeding.Issue 1: Did the liquidator act reasonably in accepting BNZ's claim as a creditor?[41] As the preceding narrative makes clear, the proof of debt giving rise to most of the evidence and argument I heard is the proof of debt of BNZ. It was effectively challenged in its entirety by Mr Alexander. Given the nature of Mr Alexander'sallegations against BNZ, which amount to impropriety on the part of Ms Hart as wellas improper acts by the bank, BNZ mounted a major challenge to Mr Alexander'sclaims. It is appropriate to assess the merit of the claims, and make rulings on them, given the fact that they have been advanced twice in earlier proceedings without the ultimate merit being able to be assessed. However, as a matter of law, the questionfor immediate determination is not whether Mr Alexander or BNZ is right, but whether Mr Noyce's decisions as liquidator, in respect of BNZ's claim, werereasonable. I will deal with that point first.Did the liquidator act reasonably?[42] Section 304 of the Act requires a liquidator either to accept or reject unsecured claims. Section 253 provides that the principal duty of the liquidator is to act in a reasonable and efficient manner in distributing funds to creditors.[43] One of the leading texts suggests that the power to review a liquidator's actions will be exercised in cases of fraud, where the liquidator's discretion has notbeen exercised in good faith, or where the liquidator has acted unreasonably.6Nothing has been advanced by Mr Alexander which could justify consideration of fraud or an absence of good faith.[44] In relation to reasonableness, the starting point is that the court is reluctant to interfere with a good faith exercise of a liquidator's discretionary powers and has repeatedly held that liquidators should remain free to undertake their duties in a cost- effective and efficient manner.7 The court is not necessarily required to undertake a meticulous examination of the facts and law relating to a particular proof of debt forthe purpose of determining whether the liquidator's decision in relation to that proofof debt can ultimately be proved to be right. That would be to hold the liquidator to a more exacting standard than s 304 of the Act envisages.[45] The authorities suggest that the court will undertake a fresh assessment of whether a claim should be admitted where: either it is obvious that the liquidator has not acted reasonably because, for example, the liquidator did not request or consider relevant evidence; or new and relevant evidence is before the court that was not available to the liquidator.86 Morison's Company Law (NZ) (online loose leaf edition, Lexus Nexus) at [55.8]7 Ibid8 Manifest Capital Management Pty Ltd v Lawrence HC Auckland CIV-2010-404-7741, 20 December 2011 at 8.[46] I am satisfied that Mr Noyce as the liquidator in this case acted reasonably in accepting the BNZ proof of debt. BNZ provided Mr Noyce with the relevant bank records which clearly establish the debt. This was in turn directly confirmed by a judgment of this court on the summary judgment order against St Stephens and Parnell. Mr Noyce said that he fully understood that he, as a liquidator was not obliged unquestioningly to accept claims based on judgment debts, but that he concluded on the basis of all of the judgments coupled with all the other information available to him, including the other judgments and the affidavit evidence filed in the proceedings that he would not be justified in rejecting or reducing BNZ's claim. MrNoyce said that he had taken account of the observations of Associate Judge Bellrelating to Mr Alexander's contention that the sum of approximately of $1.6 millionhad improperly been transferred out of the joint account. In my judgment, assessingMr Noyce's decision at the time, I am satisfied that he acted entirely reasonably inaccepting BNZ's claim without reducing it by $1.6 million. In any event, as I will come to, I am satisfied that BNZ had authority to make the transfers.[47] Mr Alexander contended that Mr Noyce failed to meet his obligations as liquidator to the creditors by discontinuing claims of St Stephens and Parnell against BNZ and by consenting to, or not opposing, claims of BNZ. This contention was advanced in support of different claims of Mr Alexander, both in respect of positive relief which he argued he was entitled to, and also as grounds for resisting the remuneration Mr Noyce seeks approval for, as well as in opposition to the BNZ proof of debt. For the reasons recorded above, I am satisfied that Mr Noyce not only acted reasonably, but also entirely properly in reaching a conclusion that the two companies in liquidation, which were without assets, should not pursue claims against BNZ.[48] This conclusion is sufficient to confirm Mr Noyce's decision to accept theBNZ claim, as it was originally presented and then reduced for the mortgagee sale recovery. For the reasons earlier noted I will nevertheless deal, to the extent necessary, with the merit of the claims by Mr Alexander against BNZ.Mr Alexander's claims against BNZ[49] Mr Alexander contended that BNZ has no entitlement to claim in the liquidations because of substantial losses alleged to have been caused by BNZ to Parnell and St Stephens. It is not necessary to go into the detail of the various claims. A sufficient factual narrative is contained in the earlier judgment of Associate Judge Bell. The foundation for Mr Alexander's contentions is that thetransfer by BNZ of $1.606m was unauthorised.[50] The onus was on Mr Alexander to establish that the transfers were unauthorised. If he does not succeed in that contention it all falls away. The onlyevidence in support of Mr Alexander's contentions is his own evidence and evidence from Mr John Scutter, a chartered accountant.[51] Mr Scutter's evidence is premised on an assumed conclusion that the transfers were unauthorised. For reasons I come to I am satisfied that Mr Alexander has fallen well short of establishing that they were unauthorised. I am positivelysatisfied that they were authorised. For that reason Mr Scutter's evidence is not of assistance. In any event, even on the primary assumption Mr Scutter made, other assumptions and methodology, which appears to be based on instructions from Mr Alexander, means that the evidence is unhelpful and I leave it to one side.[52] Mr Alexander's case stands or falls on his evidence. None of his evidence on the critical issues is supported by any contemporaneous document. His case therefore turns on whether I am satisfied that he is a credible witness and, if so, that the evidence he has given is reliable.[53] Mr Alexander was subjected to probing cross examination by Mr Kennedy on behalf of BNZ. At an early stage of that cross examination – probably within the first half hour or so — I came to the conclusion that Mr Alexander was not a credible witness. This did not relate simply to specific issues, but to his credibility in general.[54] The cross-examination that most clearly demonstrated a lack of credibility was evidence from Mr Alexander to me in direct conflict with evidence he had given in the earlier proceedings, or evidence which he clearly had prepared for the earlierproceedings although given in a direct way by Mr Osborne or Mrs Alexander. This was coupled with evasiveness in answers, even in the face of documents indicating something contrary to what Mr Alexander was asserting. There were other contentions by Mr Alexander shown to be false by documents which were plainly authentic. There is also the forged letter containing purported consent from BNZ to the lease to Fifer. There is no direct evidence that this letter was forged by Mr Alexander. But I am satisfied, to the civil standard applying, that Mr Alexander was party to the presentation of this letter to the court when he must have known that it was not genuine. The evidence establishes clearly that all actions of relevance in this proceeding were directed by Mr Alexander. This was a conclusion reached by Associate Judge Bell even without the benefit of cross examination.9 The day before the scheduled trial to determine the authenticity of the letter, the defendantswithdrew their challenge to BNZ's application for vacant possession and consented to the order. I am satisfied that would not have happened without Mr Alexander'sdirection. The inference to be drawn from all of the evidence relating to the presentation and use of this letter, and a substantial body of other evidence relating toMr Alexander's control of everything of consequence relating to dealings with BNZ, and then the dispute with BNZ, is that Mr Alexander was a party to forgery and to presentation of a forged letter to the Court.[55] My conclusions that Mr Alexander was not a credible witness, on any relevant issue, and that he was in control in fact, if not in law, is sufficient to dismissMr Alexander's contentions against BNZ and, in particular, his contention that the transfers were not authorised.[56] There are other reasons to conclude that the transfers were in fact authorised.A number of these are contained in Associate Judge Bell's provisional observationsearlier referred to.10 Those conclusions are sufficient to dismiss all of MrAlexander's claims. In respect of the quantum of BNZ's proof of debt as acceptedby Mr Noyce, there are further reasons for concluding that the decision by Mr Noyce is the proper decision, but it is unnecessary to explore those alternatives, which werefully set out in Mr Kennedy's closing submissions.9 Parnell Property Investments Ltd v BNZ [2012] NZHC 12 at [10]10 Parnell Property Investments Ltd v BNZ [2-12] NZHC 12 at [50]-[63[57] Before leaving this particular subject it is nevertheless appropriate to record that I am satisfied that the documents produced by BNZ in support of its positive contentions that the transfers were authorised, are authentic, were produced or signedon the dates recorded on them, and provide clear support not only for the BNZ'sclaim, but also for its contention that it was authorised to make the transfers. The arrangements as described by Ms Hart, and what she says was agreed in discussions with Mr Alexander, and on occasions Mrs Alexander, were also entirely consistent with the type of commercial arrangement a bank would make with a heavily indebted group of borrowers.Issue 2: Should the assets and liabilities of St Stephens and Parnell be pooled?[58] Mr Noyce's application for pooling was made under s 271(1)(b) of the Act which is as follows:271 Pooling of assets of related companies(1) On the application of the liquidator, or a creditor or shareholder, the court, if satisfied that it is just and equitable to do so, may order that—(b) where 2 or more related companies are in liquidation, the liquidations in respect of each company must proceed together as if they were 1 company to the extent that the court so orders and subject to such terms and conditions as the court may impose.[59] Section 2(3) of the Act prescribes the circumstances when one company is related to another company. Two defined circumstances are relevant: when more than half of the issued shares of each company are held by members of the other, whether directly or indirectly; and when the businesses of the companies have been so carried on that the separate business of each company, or a substantial part of it, is not readily identifiable. The first alternative is clearly established. Mr Noyce'sevidence also clearly establishes that the companies effectively operated as a joint venture and that it is not possible to identify their assets or liabilities.[60] The evidence adduced by Mr Noyce fully justifies a conclusion that it would be just and equitable for the liquidations to proceed and, more particularly at this point, for them to be completed, together as if the two companies were one. It is unnecessary to summarise this evidence because Mr Alexander, who is the only person opposing pooling, has not produced any evidence, or any argument, demonstrating that the evidence produced by Mr Noyce is in some way unreliable.Mr Alexander's argument is founded on different evidence, which I will come tonext. The relevant point at this stage of the analysis is that, in the absence of MrAlexander's contention, an order for pooling would be justified.[61] Mr Alexander's argument is that, when the Alexander interests and Sycamore interests agreed to buy the property, the intention was to subdivide it and, following subdivision, for the Alexander interests, through Parnell, to take one part of the subdivided land and for the Sycamore interests, through St Stephens, to take the other part. Mr Alexander said that the part that would go to Parnell, and therefore to the Alexander interests, was the part that included the house. The significance of this is that the only asset realised in the liquidation was a sum of $950,000 paid insettlement of a leaky home claim in respect of the house. Mr Alexander's clearobjective was then to secure some, and perhaps all, of the net recovery, after liquidation expenses, in reliance on the claim he advanced that Fifer and Compark have priority as creditors.[62] I reject Mr Alexander's contentions on alternative grounds. The first is that, given the conclusions I have reached relating to his credibility, I am not able to attach weight to the argument he now advances which in my judgment is contrived to fit a set of fortuitous circumstances. This is not a conclusion of contrivancerelated solely to this argument. Much of Mr Alexander's arguments are contrived tofit particular circumstances, with those arguments shifting, and sometimes to the opposite effect, depending on the circumstances.[63] The alternative ground for rejecting Mr Alexander's claim is that it makes nodifference even if the original intentions of the Sycamore interests and the Alexander interests were as Mr Alexander now says they are. The land was in fact subdivided. But, following subdivision, title to the subdivided pieces of land was taken by thetwo companies as tenants in common in equal shares for each piece of land. This included the piece of land which had the house on it and the joint venture continued to operate without distinction between the two companies. In other words, all of the positive evidence presented by Mr Noyce to justify pooling, is evidence applying after, as well as before, subdivision and applying through to the date of liquidation of both companies.[64] Accordingly, the liquidators in Mr Noyce's application for a pooling order isgranted.Issue 3: Mr Alexander's challenge to the liquidation claims of the Sycamore associated companies.[65] Mr Noyce has accepted claims by the third and fourth defendants, which are companies associated with Sycamore interests.[66] Mr Alexander contended that Mr Noyce was wrong to accept these claims, or at least that the third and fourth defendants have no entitlement to share in the net recovery by the liquidator from settlement of the leaky home claim. Given theconclusion I have already reached on Mr Alexander's argument about pooling, thereis no merit in this present argument. I agree with a submission of Mr Thompson for Mr Noyce: even if it is assumed that the land with the house on it was ultimately to go to the Alexander interests, ultimate ownership has nothing to do with the question of how the acquisition of the property was funded or the way in which the assets and liabilities of the companies were dealt with through to liquidation.[67] I confirm Mr Noyce's acceptance of the claims of the third and fourthdefendants.Issue 4: Do Fifer and Compark have priority as creditors?[68] Mr Alexander contended that Fifer and Compark have priority to the available funds for distribution pursuant to clause 1(1)(e) of schedule 7 of the Act. This provision, and a related provision in subclause (1), are as follows:(1) The liquidator must first pay, in the order of priority in which they are listed, —(a) the fees and expenses properly incurred by the liquidator in carrying out the duties and exercising the powers of the liquidator and the remuneration of the liquidator; and.(e) to any creditor who protects, preserves the value of, or recoversassets of the company for the benefit of the company's creditorsby the payment of money or the giving of an indemnity, -(i) the amount received by the liquidator by the realisation of those assets, up to the value of that creditor'sunsecured debt; and(ii) the amount of the costs incurred by that creditor in protecting preserving the value of, or recovering those assets.[69] Mr Alexander produced documents which he said evidence payments made by Compark and Fifer which give them priority under paragraph (e) of subclause 1. The asset to which this contention is directed is the compensation recovered on the leaky home claim. Mr Alexander contended, in essence that the payments by Fifer and Compark protected an asset consisting of a claim for compensation, or preserved the value of it, or in some way recovered it.The leaky home claim[70] A brief narrative is required to put Mr Alexander's claim into context.[71] It appears that possible weathertightness problems with the house were first noticed in about 2009. There is an invoice from a company Kazon Limited for a"preliminary weathertight assessment" dated 27 July 2009. In June 2010 anapplication was made to the Department of Building and Housing for a report under the Weathertight Homes Resolution Services Act 2006. The application was made on behalf of Parnell and St Stephens. The Department provided a report in October 2010. In December 2010 an estimate of remedial costs was provided by a company called Kwanto Limited. Payments for the reports, application, and some other costs, were made by Compark or Fifer.[72] BNZ sold the property as mortgagee in June 2012. Completion of a claim in the Weathertight Homes Tribunal was not possible. This is because a claim in the Tribunal must be by the owner of the property.11 Mr Noyce, as liquidator on behalf of St Stephens and Parnell, instructed a specialist firm of solicitors, Grimshaw & Co, to pursue a common law claim for damages. Mr Noyce had no available funds and Grimshaw & Co agreed to work on a contingency fee basis. Mr Alexander says that he assisted in advancing this claim. The evidence is clear that his attempt to become involved was actively resisted. The lawyers expressly advised that they did not wish to work with or have any involvement with Mr Alexander and they did not do so.[73] I am satisfied, on the evidence, that all relevant acts which resulted in the negotiation of settlement of the claim, and in payment of the agreed damages, occurred without any assistance, direct or indirect, from Mr Alexander, or from Fifer or Compark. I am also satisfied on the evidence that at no time did Mr Noyce, as liquidator of either of the companies, agree to Fifer or Compark incurring any expenditure for the purpose of pursuing the claim which resulted in the recovery in the liquidation.Evaluation of the priority claim[74] I received careful submissions on the interpretation and application of clause 1(1)(e) of schedule 7 from Mr Thompson and Mr Kennedy. It was submitted on a number of grounds, based on their construction of the provision, that the claims of Fifer and Compark cannot succeed. For example, most of the payments were made before the companies went into liquidation. Mr Kennedy submitted, on the authority of Tolcher v National Australia Bank, applying a broadly similar provision, that payments made by a creditor before liquidation cannot be taken into account.12There is force in the submission that the conclusion in that case applies to the New Zealand provision. However, I consider that the direct route to the claim is by application of the operative words in paragraph (e) to the facts as I have found them, and to some further findings of fact.11 Weathertight Homes Resolution Services Act 2006, s 1412 Tolcher v National Australia Bank (2004) 182 FLR 419[75] A claimant under paragraph (e), must establish that the payment was done"for the benefit of the company's creditors." Mr Alexander, as assignee of the claims of Fifer and Compark, and in substance on his own behalf, has the onus of establishing this. I am not persuaded that any of the payments, either before or after liquidation of either of the companies, were made for the benefit of the general body of creditors of St Stephens and Parnell, or either of them. There is no reliable evidence that they were. The inference I draw, having regard to numbers of the substantial findings of fact recorded to this point, is that the payments before liquidation were made solely for the benefit of the Alexander group in general, with the ultimate beneficiary being whoever Mr Alexander might have determined would be the beneficiary had the claims been successful before liquidation. The payments made after liquidation plainly were not for the benefit of the general body of creditors, with the most substantial creditor in terms of value being BNZ. Indeed, that conclusion could be drawn in respect of payments made before liquidation given the fact that the defaults under the BNZ facilities had occurred before the weathertightness issues were discovered and Mr Alexander clearly did not want any money that might have been recovered to go to BNZ. In addition, the payments, or purported payments, made after liquidation in my judgment were contrived with a view to seeking to secure all of the net recovery from a claim for the sole benefit of Fifer and Compark.[76] Mr Alexander's priority claim fails for another reason. The evidence does not establish that any of the payments protected the asset, or preserved its value, or recovered it. The asset in question is the compensation recoverable by the common law claim advanced by Mr Noyce, as liquidator, and in the other circumstances described above. The payments made before liquidation had nothing to do with this claim. The payments made after liquidation, or purported payments, did nothing to advance the claim made by the liquidator.[77] In addition, the payments made after liquidation were not made with the consent or authority of Mr Noyce. In the circumstances of this case they would haveto have been made with Mr Noyce's consent. Mr Alexander was expressly told thathe was not to be involved. I also agree with a submission for Mr Noyce and BNZ that part of the claim is not credible. Mr Alexander claims that he provided advice toFifer, as a consultant, for the purpose of the litigation that was instigated by Mr Noyce and conducted by Grimshaw and Co. Mr Alexander says that his bills to Fifer were either paid by Fifer or Fifer provided an indemnity in respect of them. There is one bill for purported consultancy services between April 2012 and May 2013 in a sum of $18,383. There is another bill for the period June to September 2013 in a sum of $22,380. Mr Noyce accepted that the pre-liquidation payments were made. He rejected the claims just described on the basis, in effect, that they were contrived. I agree.[78] The claim that Fifer and Compark have priority is rejected.Issue 5: Mr Noyce's remuneration and costs on this proceeding[79] Mr Alexander opposed the remuneration sought by Mr Noyce primarily on the grounds that Mr Noyce had wrongfully failed to pursue claims against BNZ. For the reasons already recorded, those grounds were not made out.[80] Given the fact that BNZ is a party to this proceeding, has a claim representing over 50 per cent in value of all claims, and has not opposed the level of remuneration sought, this is not a case where the Court needs to undertake some independent scrutiny of the reasonableness of the remuneration. Notwithstanding that observation, I do record that I am satisfied that the remuneration sought is reasonable. A winding up that might have been reasonably straightforward was complicated by the convoluted group structure created by Mr Alexander and further complicated by steps taken by Mr Alexander.[81] The total remuneration sought by Mr Noyce, including his reasonable costs actually incurred in this proceeding, are approved as liquidation expenses.BNZ costs[82] BNZ sought costs if it successfully resisted what amounted to cross-claims against it by Mr Alexander. There were no submissions as to the category or quantum of costs.[83] I am satisfied that BNZ is entitled to costs against Mr Alexander, Fifer andCompark. BNZ's submissions on quantum should be filed and served within four weeks of the date of this judgment and any response for Mr Alexander, directly or on behalf of Fifer or Compark, are to be filed and served within a further three weeks.______________________________________Woodhouse J