ISLAND GRACE (FIJI) LTD (IN REC AND IN LIQ) v SATORI HOLDINGS LIMITED (IN INTERIM LIQ [2023] NZHC 219

ISLAND GRACE (FIJI) LTD (IN REC AND IN LIQ) v SATORI HOLDINGS LIMITED (IN INTERIM LIQ[2023] NZHC 219 [17 February 2023]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2022-419-000145[2023] NZHC 219UNDER Companies Act 1993BETWEEN ISLAND GRACE (FIJI) LIMITED (INRECEIVERSHIP AND IN LIQUIDATION)PlaintiffAND SATORI HOLDINGS LIMITED (ININTERIM LIQUIDATIONDefendantHearing: 23 and 30 November 2022Appearances: A S Olney and B E Marriner for PlaintiffL A O'Gorman KC for DefendantJudgment: 17 February 2023Reissued: 17 February 2023 at 4.55 pmJUDGMENT OF ASSOCIATE JUDGE P J ANDREWThis judgment was delivered by Associate Judge Andrewon 17 February 2023 at 4.55 pmpursuant to r 11.5 of the High Court RulesRegistrar / Deputy RegistrarDate .[1] This judgment is being re-issued to formally appoint and record the names anddetails of the liquidators as set out in [119].Introduction[2] These are liquidation proceedings. They follow the appointment of interimliquidators in June 2022. Interim orders were granted because of a concern that thedirector of the defendant company, Mr Andrew Griffiths, was dissipating companyassets.[3] The defendant, Satori Holdings Ltd,1 is the corporate trustee of Mr Griffiths'family trust.2 It is a New Zealand-registered company and registered as a foreigncompany in Fiji.[4] The plaintiff, Island Grace Fiji Ltd (in receivership and liquidation),3 is also aNew Zealand company. It is a corporate trustee holding the assets of the Island Gracejoint venture.4 The main asset of the IGJV was a Fijian resort known as "Six SensesFiji".5 Satori was a 24 per cent joint venture partner.[5] IGFL says that Satori is deeply insolvent; it has substantial unpaid debts arisingfrom a failure to make capital calls issued by the IGJV and to meet its share of anindemnity debt (FJD 6,166,710) for a Fijian Development Bank loan.6[6] Satori has not opposed the substantive liquidation proceedings. Mr Griffiths,as a shareholder, has filed a notice of appearance opposing liquidation and a protest tojurisdiction. He says that the Fijian courts are the forum conveniens. He has also filedthe following interlocutory applications:(a) An application to set aside the appointment of interim liquidators, torestrain advertising and to stay the proceedings; and1 Satori.2 Satori Family Trust.3 IGFL.4 IGJV.5 The resort.6 FDB.(b) Two applications under the High Court Rules 2016 r 9.75 forexamination of Mr Rees Logan (former administrator and currentliquidator of IGFL) and to obtain documents from Sustainable LuxuryHoldings (BVI) Ltd (the manager of the resort).[7] In response to the protest to jurisdiction and the interlocutory applications,IGFL says that the proceedings remain unopposed; Mr Griffiths lacks standing, as ashareholder, to protest the jurisdiction. It also says that Mr Griffiths cannot appear onthe substantive liquidation application without special leave of the Court and thatMr Griffiths has failed to establish on the evidence a proper basis for the grant ofspecial leave. There is no evidence, IGFL claims, establishing an arguable case thatSatori is in fact solvent.[8] The critical issues I must determine are:(a) Does Mr Griffiths have standing to protest the jurisdiction and to bringthe interlocutory applications?(b) Should special leave be granted to allow him to file a statement ofdefence out of time, and/or to seek a stay of proceedings and an orderrestraining advertising?(c) Is Satori unable to pay its debts?(d) Is Fiji forum conveniens?(e) Is it just and equitable to make orders for liquidation?[9] In accordance with the directions of Associate Judge Gardiner of 6 September2022 and 10 November 2022, Mr Griffiths' interlocutory applications, his protest tojurisdiction and his opposition to the substantive liquidation proceedings were allheard together on 23 and 30 November 2022. Mr Griffiths filed substantial evidenceand submissions in opposition to the liquidation application. He was heard inopposition to that application, and I have taken into account and considered hisevidence and submissions in coming to my conclusions.7Factual backgroundThe Island Grace joint venture[10] As noted, Satori is a limited liability company incorporated in New Zealand.Mr Griffiths, resident in New Zealand, is its sole director and shareholder.[11] The IGJV is an unincorporated joint venture governed by the Amended andRestated Joint Venture Agreement dated 14 March 2019.8[12] The affairs of the IGJV were conducted through its Management Committeepursuant to the terms of the ARJVA and its assets were held by IGFL as trustees. IGFLis also a New Zealand company and is registered in Fiji as a foreign company.[13] The joint venture partners in the IGJV9 and their respective participatinginterests are:(a) Sequitur Hotels Pty Ltd10 – 52 per cent;(b) Satori (as trustee for the Satori Family Trust) – 24 per cent;(c) NJA Resorts Pty Ltd11 – 16.75 per cent;(d) Sustainable Luxury Holdings (BVI) Ltd12 – 7.25 per cent.[14] As noted, the main asset of the IGJV was the resort known as "Six Senses Fiji".The resort is part of a larger development planned to comprise three marinas and up7 See [11] of the minute of Associate Judge Gardiner dated 10 November 2022 where it is notedthat Mr Griffiths has filed a notice of appearance indicating his opposition to the substantiveapplication (High Court Rules 2016, r 31.18).8 ARJVA.9 IGJV parties.10 Sequitur Hotels.11 NJA.12 SLH.to 60 private residences, to be undertaken by another unincorporated joint ventureknown as Vunabaka Bay joint venture,13 in which Satori is also a joint venture party.[15] The resort is located on land subleased from Vunabaka Bay Fiji Ltd.14 Thereare three separate subleases, each with a 99-year term.[16] The resort opened in April 2018. Shortly afterwards, Sequitur Hotelscompleted its FJD 20m investment in the IGJV, to which it had committed to inDecember 2017. The debt and security arrangements in place were registered in NewZealand and Fiji.Funding for the IGJV between November 2019 and November 2021[17] In late 2019, in response to financial pressures and to meet its fundingrequirements, the Management Committee of the IGJV resolved to make a series of10 capital calls.[18] Between November 2019 and June 2020, there were four capital calls.Between July 2020 and January 2021, there were a further six capital calls.[19] The resort closed in March 2020, following the COVID-19 pandemic. It hassince re-opened.[20] By January 2021, Sequitur Hotels and SLH had met their respective shares ofall 10 capital calls and had contributed to the capital funding of FJD 6,525,740 andFJD 909,839 respectively. NJA failed to meet its share of any of the capital calls andits funding default was a total of FJD 2,102,041. Satori failed to meet its share of thelast six capital calls and its funding default was a total of FJD 2,048,040.[21] In accordance with the ARJVA, NJA and Satori lost the right to vote on jointventure matters and their participating shares were not counted for the purpose ofcalculating whether voting thresholds for passing resolutions were satisfied.13 VBJV.14 VBFL.Insolvency of the IGJV[22] On 21 December 2021, the directors of IGFL unanimously resolved that thecompany was insolvent or likely to become insolvent and appointed administrators.15[23] On 23 December 2021, Mr Strawbridge and Mr McGrath16 were appointed asreceivers of IGFL by Sequitur Hotels pursuant to a security it held.[24] On 16 February 2022, the receivers were appointed under a secondappointment as receivers of IGFL, this time by Sequitur Capital Pty Ltd pursuant to asecurity it held.[25] IGFL's main asset was the resort. The receivers engaged a specialist salesagent to market the resort for sale. Following a global marketing campaign, the resortwas sold to the highest bidder (Sequitur Resorts Pty Ltd) on 2 May 2022 for FJD 24m.[26] After sale of the resort FJD 29,768,285 remained owing to creditors.[27] Pursuant to cl 4.3 of the ARJVA, each of the IGJV parties are severally liableto IGFL for their pro-rata share of that FJD 29,768,285 shortfall. Satori's share of thatamount (24 per cent) is at least FJD 6,166,710.[28] On 5 May 2022, liquidators were appointed to IGFL.Expert determination[29] There was a dispute as to the consequence of Satori's failure to meet its shareof the capital calls at issue. This included whether Satori's failure resulted in a debtowed to IGFL.[30] Satori referred the dispute to expert determination pursuant to the disputeresolution provisions of the ARJVA.15 On 20 December 2021, Satori sought an interim injunction (on a Pickwick basis) preventing theappointment of an administrator. See Satori Holdings Ltd v Island Grace (Fiji) Ltd [2021] NZHC3574.16 Receivers.[31] On 1 April 2022, the Hon Paul Heath KC issued his expert determination. Hedetermined, amongst other things, that Satori's failure to pay its share of the capitalcalls (a total of FJD 2,048,040) was an outstanding debt owed by Satori to IGFL.[32] On 13 May 2022, Mr Heath KC issued his costs decision in which he awardedcosts against Satori and in favour of Sequitur Hotels in the sum of NZD $73,000.[33] Clause 13.3 of the ARJVA provides that the expert determination and the costsdetermination are final and binding on the IGJV partners, which include Satori.[34] In April 2022, IGFL served a statutory demand on Satori in Fiji in respect ofthe capital call debt in the sum of FJD 2,048,040. In May 2022, Satori applied to theHigh Court in Fiji to set aside the demand. IGFL subsequently withdrew the statutorydemand.[35] In April 2022, IGFL served a statutory demand on Satori in New Zealand inrespect of the capital call debt. On 10 May 2022, Satori applied to have that statutorydemand set aside.17 Those proceedings are on hold pending the outcome of theseproceedings.[36] In May 2022, Sequitur Hotels served a statutory demand on Satori in NewZealand in respect of the costs debt. On 27 May 2022, Satori applied to have thatstatutory demand set aside.18 Those proceedings are also on hold pending the outcomeof these proceedings.Interim liquidation[37] On 21 June 2022, Campbell J granted an application by IGFL appointinginterim liquidators to Satori.19[38] In an updated report to the Court dated 21 November 2022, the interimliquidators advise as to the following assets and liabilities of Satori:17 CIV-2022-404-835.18 CIV-2022-404-977.19 Island Grace (Fiji) Limited (in rec and liq) v Satori Holdings Ltd HC Hamilton CIV-2022-419-145, 21 June 2022 (Minute of Campbell J).Assets(i) The VBJV interest, namely a 31.66 per cent shareholding in theVBJV;20(ii) The IGJV interest;(iii) An ANZ bank account with a residual balance of FJD 96.10 (thataccount remains frozen).Liabilities(i) Capital calls owed of FJD 2,048,040;(ii) Costs award of the Hon Paul Heath KC of NZD $73,000;(iii) Indemnity claims of FJD 6,166,710.Related Fiji proceedings[39] In 2019, Sequitur Hotels Pty Ltd and Sequitur Capital Pty Ltd filed proceedingsagainst Satori, Mr Griffiths and others in the High Court of Fiji. They allege, amongstother things, misrepresentation, misleading and deceptive conduct in trade and breachof contractual warranties in relation to the formation of the IGJV.21 An amendedstatement of claim was filed in July 2022. The proceedings are ongoing.[40] In June 2022, Satori filed proceedings in the High Court in Fiji, challengingthe validity of the appointment of Mr Strawbridge and Mr McGrath as receivers ofIGFL. It is contended that the receivers, Mr Strawbridge and Mr McGrath, are notlicenced liquidators according to the laws of Fiji and accordingly were and remainunable to be appointed receivers of IGFL. Those proceedings were filed prior to theappointment of the interim liquidators for Satori but served subsequent to the grant ofthose interim orders. The proceedings remain on foot and there is a dispute as to thelegal representation of Satori.2220 See [14] above.21 See Sequitur Hotels Pty Ltd v Satori Holdings Pte Ltd [2020] FJHC 276; HBC270/2019, 3 April2020, where Stuart J discharged ex parte freezing and Anton Piller orders on the basis of materialnon-disclosure by the plaintiffs. See also Sequitur Hotels Pty Ltd v Satori Holdings Ltd [2020]NZHC 2032 at [19] and [20].22 Satori Holdings Ltd v Strawbridge [2022] FJHC 779; HBE30/2022, 16 December 2022.[41] There are also matrimonial proceedings between Mr and Mrs Griffiths in thefamily division of the Magistrates Court in Fiji. On 1 April 2022, the residentMagistrate made an order by consent that Mrs Morgen Griffiths, the applicant, was tobecome the new party (through an entity nominated by her) to the VBJV and theshareholder of Vunabaka Bay Fiji Ltd in the same proportions as held by Satori (31.66per cent).[42] The receivers of IGFL, Mr Strawbridge and Mr McGrath, subsequently appliedto the family division of the Magistrates Court to stay the consent orders. Stay ordershave been granted. At a hearing on 31 May 2022, the Court advised that it had writtendirectly to Mr and Mrs Griffiths seeking information as to whether their marriage hadended, as represented to the Court.Relevant legal principles(a) – Standing[43] Rule 31.16 of the High Court Rules reads:Statement of defence(1) Rule 5.47 does not apply to a proceeding commenced by the filing ofa statement of claim under rule 31.3.(2) A person, being the defendant company or a creditor or shareholderof that company, who intends to defend a proceeding commenced bya statement of claim under rule 31.3 must file a statement of defencein the registry of the court named in the notice of proceeding.(3) A person who files a statement of defence must serve a copy of thatstatement of defence on –(a) the plaintiff; and(b) any other person who, when the statement of defence is filed,has filed a statement of defence in the proceeding.(4) If the defendant company has filed a statement of defence, a statementof defence filed by a creditor or shareholder of that company muststate specifically any grounds of opposition that are additional to thoseappearing in the company's statement of defence.[44] Rule 31.18 of the High Court Rules reads:AppearanceA person (other than the defendant company) who intends to appear on thehearing of the proceedings may, without filing a statement of defence, file anappearance in form C 9 –(a) stating that the person intends to appear; and(b) indicating whether that person supports or opposes the application toput the company into liquidation.[45] Rule 31.20 of the High Court Rules reads:Effect of failure to file statement of defence or appearanceIf a person who is entitled to file a statement of defence or an appearance in aproceeding commenced by the filing of a statement of claim under r 31.3 failsto file a statement of defence or an appearance within the time prescribed, thatperson must not, without an order for extension of time granted on applicationmade under r 31.22 or the special leave of the court, be allowed to appear atthe hearing of the proceeding.[46] Rule 31.22 of the High Court Rules reads:Interlocutory applications(1) When a proceeding is commenced under rule 31.3, an interlocutoryapplication (unless made with the leave of the court) may not be madeto the court before the date of hearing specified in the notice ofproceeding served with that statement of claim unless it is –(a) an application for an extension or abridgement of time; or(b) an application under rule 1.9, 31.6(2), or 31.11; or(c) an application for the appointment of an interim liquidator; or(d) an application for directions; or(e) an application to excuse non-compliance with any rule in thisPart.(2) When a statement of defence is filed in a proceeding commencedunder rule 31.3 and the hearing of that proceeding is adjourned for theallocation of a hearing date on a defended basis, these rules apply asif the proceeding had been commenced by a statement of claim filedunder Part 5 and not under rule 31.3.(3) The inherent jurisdiction of the court is not limited by this rule.(b) – Liquidation[47] Under ss 241(4)(a) and (d) of the Companies Act 1993 the Court may appointa liquidator if it is satisfied that:(a) The company is unable to pay its debts; or(d) It is just and equitable that the company be put into liquidation.[48] In Yan v Mainzeal Property and Construction Ltd (in rec and liq), the Court ofAppeal made the following observations:23[61] It has long been established that, as a general rule, an order to put acompany into liquidation will not be made where the application is foundedupon a debt that is genuinely disputed. To apply to wind up a company insuch circumstances is regarded as an abuse of the court's process: BatemanTelevision Ltd (in liq) v Coleridge Finance Co Ltd. In such cases, the courthas an inherent jurisdiction to prevent such an abuse of process. But the courtalso has power to consider disputed debts in the context of an opposedapplication for liquidation or upon applications for orders restrainingadvertising and staying proceedings. The relevant principles were recentlysummarised by Associate Judge Faire (now Faire J) in South WaikatoPrecision Engineering Ltd v Ahu Developments Ltd in these terms:(a) A winding up order will not be made where there is a genuine andsubstantial dispute as to the existence of a debt such that it would bean abuse of the process of the Court to order a winding up;(b) In such circumstances, the dispute, if genuine and substantiallydisputed, should be resolved through action commenced in theordinary way and not in the Companies Court;(c) The assessment of whether there is a genuine and substantial disputeis made on the material before the Court at the time and not on thehypothesis that some other material, which has not been producedmight, nonetheless be available;(d) The governing consideration is whether proceeding with anapplication savours of unfairness or undue pressure.23 Yan v Mainzeal Property and Construction Ltd (in rec and liq) [2014] NZCA 190 at [61] (footnotesomitted).Analysis and decisionIssue (a) – Standing of Mr Griffiths[49] It is clear from the notice of appearance and protest to jurisdiction, as well asaffidavits and other documents filed, that Mr Griffiths seeks to appear and be heard asa contributory. As he says in his notice of appearance, he is a shareholder holding 100per cent of shares in Satori.[50] Mr Griffiths has clearly been on notice since IGFL's notice of opposition of 22July 2022 that IGFL's position is that he has no standing. Mr Griffiths has made aclear choice not to file a statement of defence. He could have chosen that option underr 31.16(2) of the High Court Rules. I also accept that as Satori's sole director he couldhave given instructions on behalf of Satori to file a statement of defence.24 Again, hedid not do so, despite being legally represented throughout.[51] The issue of standing, therefore, arises in the context where the Court is beingasked by Mr Griffiths, as a shareholder, to decline jurisdiction, set aside theappointment of interim liquidators and to stay the proceedings. He also opposes thesubstantive liquidation application without having filed a statement of defence andbeen added as a defendant.[52] IGFL submits that the issue of whether Mr Griffiths has standing to be heardon these matters is to be determined by reference to two questions:25(a) As a matter of interpreting the relevant statutory provisions or rules ofthe Court, is Mr Griffiths, as a shareholder, within the category ofpersons who may seek such orders?(b) Has Mr Griffiths established that he is a proper person to seek suchorders (i.e. does he have a proper interest)?24 Paul Heath and Michael Whale (eds) Heath and Whale on Insolvency (online looseleaf ed,LexisNexis) at [20.12]. The learned authors suggest that the approach taken by the English Courts,where powers of directors are terminated upon appointment of a provisional liquidator aside fromthe power to oppose the liquidation application, must also apply to the appointment of interimliquidators under the New Zealand Act.25 Deloitte & Touche AG v Johnson [1999] 1 WLR 1605 at 1611.[53] IGFL contends that the same two-step analysis is applicable to determiningwhether Mr Griffiths has standing to be heard in opposition to IGFL's substantiveliquidation application. It says that "a proper person" does not mean a person with aninterest in the outcome of an application or a person that may be affected by theoutcome. A person with a proper interest means a person with a legitimate interest inthe relief sought (in this case, appointment of liquidators to Satori).26[54] IGFL places particular emphasis on the English jurisprudence and the principlethat a contributory of a company must establish that the company is solvent before itis entitled to oppose a petition for liquidation.27[55] I intend to confine my analysis of the standing issue to the question ofinterpreting the relevant High Court Rules (Part 31) to determine whether Mr Griffiths,as a shareholder, is within the category of persons who may seek the orders sought. Itis not necessary for me to address the issue of whether under New Zealand law acontributory must establish solvency as a matter of standing, and whether it mightcreate an impermissible gloss on the New Zealand High Court Rules (or otherwise). Iheard very little argument on that issue. Having said that, as analysed below, thequestion of solvency does arise as a factor to be considered in relation to the grant ofleave that I must determine.[56] In applying the relevant provisions of Part 31 to the High Court Rules, Iproceed on the basis that Mr Griffiths is not a defendant. He has not filed a statementof defence and has not been added as a defendant to the proceedings. In my view, ifMr Griffiths wishes to defend the substantive liquidation proceedings, he needs to filea statement of defence. That is clear from r 31.16(2) which says that a creditor orshareholder "must" file a statement of defence.26 At 1611.27 Andrew Keay McPherson & Keay The Law of Company Liquidation (5th ed, Sweet & Maxwell,2021) at [5-015]; Edward Bailey and Hugo Groves Corporate Insolvency Law and Practice (5thed, LexisNexis, 2017) at [25.1], n 2; Deloitte & Touche AG v Johnson, above n 25, at 1611; ReCorbenstoke Ltd (No 2) [1990] BCLC 60. See also Re CBL Insurance Ltd (in liq) [2019] NZHC2291 at [19]–[23], where Courtney J cited both Corbenstoke and Deloitte in the context of a costsapplication by a shareholder against the interim liquidators of an insolvent company. Her Honourrefused the shareholder any costs because it "had no legitimate interest in the outcome of theproceeding".[57] As the commentary in McGechan on Procedure makes clear, shareholders havean independent right to file a defence to protect their position.28 The learned authorsstate: 29Contributories or shareholders who file a statement of defence will be addedas defendants and thus made parties to the proceedings. They can thenparticipate fully in the proceedings. That procedure applies where acontributory or shareholder files, as Mr Griffiths did here, an appearanceunder r 31.18 and indicating an opposition to the application. Once joined asthe defendant, the contributory or shareholder is then required to file astatement of defence.[58] Despite not being a defendant, Mr Griffiths nevertheless seeks to oppose theliquidation proceedings and has filed a r 5.49 protest to jurisdiction. However, thatrule refers specifically to defendants and makes no provision for ashareholder/contributory or creditor to appear in protest to jurisdiction. Furthermore,form C9, which is the form required for the filing of a notice of appearance underr 31.18, does not provide for a shareholder to protest to jurisdiction of the court. Inmy view, because Mr Griffiths is not a defendant, he is not within the category ofpersons who may protest to jurisdiction of the Court to hear and determine IGFL'ssubstantive liquidation application. It makes good sense that only the principal partiesin a liquidation proceeding can protest jurisdiction under r 5.49 – and in particular, thedefendant company whose status and assets are at issue.[59] In my view, Mr Griffiths, in seeking to defend the proceedings and raise forumconveniens issues, should have filed a statement of defence under r 31.16(2). Heshould then have been added as a defendant party to the proceedings. In that capacityhe could have filed forum conveniens issues.[60] There is no evidence before the Court as to why Mr Griffiths, legallyrepresented throughout, has chosen not to file a statement of defence. I do not acceptthe explanation that to have filed a statement of defence would have given rise to asubmission to jurisdiction and therefore prejudice on his behalf. The filing of astatement of defence would not preclude a shareholder such as Mr Griffiths from28 Robert Osborne (ed) McGechan on Procedure (online looseleaf ed, Thomson Reuters) at[HR31.16.01].29 At [HR31.16.04].raising forum conveniens arguments. Equally, the procedure set out in r 5.49 is notmandatory. A defendant may, instead, file a statement of defence that alerts theplaintiff to the defendant's objection to jurisdiction, rather than filing an appearanceunder r 5.49.30 Furthermore, the Court has an inherent jurisdiction to stay proceedingson the grounds of forum conveniens.31[61] Regardless of his failure to file a statement of defence, I have considered, andas analysed below, Mr Griffiths' forum conveniens argument. That is because of theway these proceedings have evolved and the directions made.[62] In respect of Mr Griffiths' interlocutory applications, r 31.11 provides that ashareholder may, with the leave of the Court, apply to restrain advertising and for astay of liquidation proceedings. The requirement for leave is a safeguard againstfrivolous applications by shareholders. Having not filed a statement of defence withintime, Mr Griffiths also needs to leave to file a statement of defence if he wishes todefend the proceedings.32Issue (b) – Should special leave be granted to allow for the filing of the statement ofdefence and to apply for orders staying proceedings, restraining advertising andrescinding interim appointments?[63] No formal application has been made by Mr Griffiths to file a statement ofdefence out of time. However, I indicated at the hearing that I would address thatissue.[64] The principles to apply in determining whether to grant leave to file a statementof defence out of time and whether to grant leave to bring the various interlocutoryapplications are similar and inter-related. In Auckland City Council v Stonne Ltd, thisCourt held, in determining whether to grant leave to file a statement of defence out oftime, that there were three matters to consider:3330 Kim v Oh [2020] NZHC 2985 at [18].31 Crane Accessories Ltd v Lim Swee Hee [1989] 1 NZLR 221 (HC); Ghose v Ghose (1997) 12PRNZ 149 (HC).32 High Court Rules 2016, r 31.20.33 Auckland City Council v Stonne Ltd HC Auckland CIV-2007-404-4208, 30 November 2007 at[21]. Associate Judge Doogue stated that he was guided by the judgment of Paterson J in FreshCut Flower Wholesalers Ltd v The Living and Giving Gift Co Ltd (2001) 60 PRNZ 173 (HC) at175.(a) Is there an arguable basis that the defendant is not liable for its debts?(b) Is the defendant solvent?(c) Has the defendant advanced a reasonable explanation for its failure tofile and serve its statement of defence?[65] The principles to apply in determining whether to grant leave under r 31.11(power to stay liquidation proceedings and restrain advertising) were summarised inCommissioner of Inland Revenue v Ron West Motors (Otahuhu) Ltd:34(a) A winding up order will not be made where there was a genuine andsubstantial dispute into the existence of a debt;(b) If the debt is genuinely and substantially disputed it should be resolvedthrough action commenced in the ordinary way and not in theCompanies Court; and(c) The governing consideration is where the proceeding with anapplication savours of either fairness or undue pressure.[66] As to whether Mr Griffiths has advanced a reasonable explanation for a failureto file and serve a statement of defence, I am prepared to give him the benefit of thedoubt, for the purpose of considering whether leave should be granted, that there wasa concern about his submission to jurisdiction. That is not the decisive criteria in anyevent.[67] Because of the way Mr Griffiths has framed his case, I propose to address thetwin elements of solvency and liability as part of my consideration of the substantivemerits of IGL's liquidation application. As noted above, the substantive applicationand the interlocutory applications were all heard together. The substantive liquidation34 Commissioner of Inland Revenue v Ron West Motors (Otahuhu) Ltd (2003) 21 NZTC at 18,281(HC) at [15]. See also Commissioner of Inland Revenue v K J Cummings Ltd (2003) 21 NZTC18,277 (HC).application engages the same elements of solvency and whether Satori is liable for thedebts.35[68] The opposition by Mr Griffiths, as shareholder, is wide-ranging. This hasgiven rise to an unnecessary degree of complexity. I will focus on the key points. Inhis notice of appearance, Mr Griffiths says that the plaintiff, IGFL, is not a creditorand he disputes the debts on which the application is brought. He also says:(a) There is an extant proceeding in the Fijian courts, as yet undetermined,relating to the validity of the appointment of the receivers who havebrought the liquidation proceedings. In those proceedings, orders aresought to set aside the transaction under which the joint venture assetsof IGFL were acquired by Mr Fell and his interests through SequiturHotels in conjunction with the receivers;(b) Upon proper accounting being undertaken of the assets of the IGJV, ofwhich IGFL was a bare trustee, IGFL will be a debtor or hold assets onbehalf of Satori;(c) The joint venture's sole business operations were based in Fiji and itwas not conducting business in New Zealand. IGFL is a company thatoperates in Fiji and is registered there as an overseas company. So, too,is Satori. It is the Fijian courts that have jurisdiction over the businessoperations and assets held in Fiji by those overseas companies carryingon business there.Issue (c) – Is Satori unable to pay its debts?[69] The debts of Satori pleaded in the statement of claim are:(a) Capital call debt of FJD 2,048,040 owed to IGFL confirmed, IGFLsays, by the final and binding determination of the Hon Paul Heath KC;35 I also note that in a minute of 10 November 2022, Associate Judge Gardiner noted that havingfiled a notice of appearance, Mr Griffiths was entitled to participate in the proceedings as adefendant.(b) Costs debt of NZD $73,000 owed to Sequitur Hotels Pty Ltd confirmed,IGFL says, by the final and binding costs determination of the Hon PaulHeath KC; and(c) The initial indemnity debt of FJD 6,166,710 owed to IGFL.[70] IGFL says that these debts arise under the ARJVA or, in the case of the costsdebt, out of the dispute resolution process initiated by Satori under the ARJVA.[71] IGFL does not rely upon the statutory presumption of insolvency in s 287 ofthe Companies Act 1993. It accepts that the statutory demands relating to the capitalcall debt and the costs debt are the subject of proceedings that remain on hold. It alsoaccepts that a statutory demand served in Fiji in relation to the capital call debt waswithdrawn after Satori applied to set it aside.36[72] Ms O'Gorman KC's principal submission on behalf of Mr Griffiths was thaton a proper accounting between the plaintiff and the defendant there is no reliablebasis for concluding that any debt is owed by Satori or that Satori is unable to pay itsdebts as they fall due. That contention is based in a large part on the allegation thatthe sale of the resort was an unlawful/improper sale by the receivers to a related partyat a "gross under-value".37Under-value sale[73] Ms O'Gorman submitted that the marketing process for the sale of the resortwas exceedingly short. She also contended that the 10-year projections and theforecasts bookings information were missing from the due diligence data room. Thatis said to be an explanation as to why the valuations obtained were less than the marketvalue for which Mr Griffiths contends.[74] However, there is no probative evidence to support those assertions and theyare expressly contradicted by the expert evidence of IGFL.36 See [34], [35] and [36] above.37 In his written submissions, Mr Griffiths contends at 2.13 that there was a substantial shortfall inthe price paid for the resort.[75] In his affidavit, Mr Strawbridge, one of the receivers of IGFL and a veryexperienced insolvency practitioner in both New Zealand and Australia, provides acomprehensive account of the receivership and sale of the resort. This involved theappointment of Jones Lang Lasalle Hotels & Hospitality,38 to market and sell theresort, a global campaign, and the selection of the party that provided the highest offer(i.e. approximately 15 per cent higher than the second-highest offer received).Mr Strawbridge notes that the sale price of FJD 24m represented a significantpremium to the most recent valuation of the resort. That valuation was obtained byFiji Development Bank,39 then the first-ranking secured lender to IGFL.[76] Mr Strawbridge says that the sale of the resort was carried out in accordancewith normal market practice for a receivership sale.[77] Mr Strawbridge further notes that FDB advised the directors of IGFL in July2021 that it intended to engage a registered Fijian valuer to carry out a fresh valuationof the resort. A market valuation of the resort was then obtained from LomaraAssociates. The valuation was in the range of FJD 18m – FJD 21m. The sale priceachieved for the resort represented a premium of 33.3 percent over the lower end ofthat range, 23.1 per cent over the mid-point of that range and 14.3 per cent over thehigh end of that range.[78] Mr Strawbridge also directly addresses the issue of the data room for the duediligence process. He notes that 24 parties signed non-disclosure agreements to accessthe online data room. Through the data room those parties were given access toconfidential information and had the ability to ask questions and to request furtherinformation. He notes that all bidders had access to the same information. He alsosays that the online data room contained information relevant to potential purchasersof the resort, including 10-year projections, the 2020 budget and a forecast roomsrevenue report prepared by the operator.[79] Mr Griffiths makes some serious allegations against experienced andindependent receivers. He says in essence that they have breached their obligation to38 JLL.39 FDB.obtain the best price reasonably obtainable. However, as noted, there is no evidenceto support that assertion and, in particular, no expert evidence. The complaints aboutthe data room are speculative. In the circumstances here, the Court could reasonablyhave expected some expert evidence given the serious allegations and amount ofmoney at stake.[80] I note that in the Fiji proceedings against Mr Strawbridge and the other receiver(i.e. challenging their appointment) that although orders are sought to set aside thetransaction on which the joint venture assets of IGFL were acquired, the purchasers ofthe assets, namely interests associated with Mr Fell, have not been named as parties.I also note that there is no extant legal challenge to the second appointment of thereceivers of IGFL by Sequitur Capital, pursuant to the security it held following theacquisition by it from FDB of the debt owed to FDB by IGFL. Neither of those factorsis decisive in itself, but they are of relevance in assessing the overall critical questionof whether Mr Griffiths has established an arguable basis that he has a defence to theliquidation proceedings and/or a basis for a stay pending the outcome of relatedlitigation.Allegations of breach of good faith[81] There are further weaknesses with the related allegations that Mr Griffithsmakes. He alleges that Sequitur Hotels and SLH, both parties to the IGJV (and whoboth voted in favour of the capital call resolutions), combined to plan to ultimatelybuy the resort at an under-value. However, the basis for the fiduciary claim appearsto be tenuous. Ms O'Gorman relies on cl 2.1 of the joint venture agreement for thesubmission that it imposes an obligation to maximise the value of the joint venture.However, cl 2.1 does not impose such an obligation. Furthermore, cl 8.1 states thatnothing in the agreement is to create a partnership or make joint venture partiesresponsible for the acts of the others. The indemnity that each party gives to the otheris outlined in detail in cl 9.1, however it makes no reference to fiduciary duties.[82] Furthermore, and importantly, these serious allegations are made byMr Griffiths on behalf of Satori, the party who failed to meet its most fundamentalobligation, namely to provide funding – and the allegation is made in respect of twoseparate joint venture partners, one of whom is an international corporate, who fundedthe resort to the tune of some $10m for a period of over two years. Beyond the mereassertions, there is little probative evidence to support these serious allegations.[83] Having said that, I accept that I cannot make any informed assessment of themerits of these potential claims based on untested affidavit evidence. Nevertheless,these claims/allegations are at best a potential asset of Satori. I agree with thesubmission of Mr Olney that if there is merit to these claims and a proper economicbasis for prosecuting them then the liquidators are best placed to make the relevantassessments and decisions.40[84] I further observe that even if relief were granted by a court setting aside thesale to Sequitur, it is not at all obvious that Satori would be better off. IGFL wouldstill be in liquidation and would still have some FJD 56,000,00041 in overdueliabilities, including to its secured senior lender, Sequitur Capital, and the IGJVparties, including Satori, would still be liable under their indemnification of IGFL.Binding determination of Satori's liability?[85] Ms O'Gorman submitted that I should not regard Mr Heath KC'sdeterminations as a final and binding determination that there was a debt owing bySatori. It was contended that Mr Heath KC had left some logically prior issuesundetermined. However, I have some difficulty in understanding that submission; itoverlooks the way in which the dispute between the parties was raised and theprincipal reason why Satori referred the dispute to expert determination in the firstinstance.[86] In his determination, Mr Heath KC recorded Satori's position as follows:The consequence of a JV partner not meeting a capital call was to have itsproportionate shares diluted in accordance with the agreement. Neither Satorinor NJA (the JV parties who have not met the capital calls) has an ongoing40 See Re Latreefers Inc, Stocznia Gdanska SA v Latreefers Inc [1999] 1 BCLC 271 at 283; EbbvaleLtd v Hosking [2013] UKPC 1. See also Cummins v Body Corporate [2021] 3 NZLR 17 at [63].41 This includes FJD 49,000,000 when the receivers were appointed, plus some FJD 7,000,000 in re-opening costs incurred.obligation to pay the calls that they have not met. There is nothing for thedefaulters to pay.42[87] Despite Satori's position, Mr Heath KC concluded that the agreement imposedan obligation on the JV partners to meet their pro rata share of capital calls. He alsoconcluded that a failure by a JV partner to meet its pro rata share is an event of default.In this case therefore, there was an event of default.[88] I accept that not all matters in dispute between the parties were resolved byMr Heath KC. In particular, he did not address the question of whether Sequitur, inbad faith, instituted a capital call process designed to enable it to control thegovernance and management of the JV. He did nevertheless address the critical issueof default and concluded that Satori and NJA continue to be in default under theagreement. In any event, it does not automatically follow from the decision ofMr Heath KC not to address all outstanding issues that there is an arguable case thatSatori is not liable for the capital call debt or that there is any merit to the allegationagainst Sequitur of bad faith.[89] Furthermore, the capital call debt is just one of a significant number of debtsthat the plaintiff, IGFL, relies upon.[90] As I have noted above, Mr Griffiths takes issue with a wide range of actionsand decisions taken by IGFL. This includes an allegation that IGFL is not entitled topursue the indemnity claim for FJD 6,166,710 pursuant to cl 4.3 of the ARJVA. Again,Mr Griffiths seeks to put at issue an interpretation of the ARJVA.[91] These issues are integrally linked with the broader contention made byMr Griffiths that upon a proper accounting being undertaken of the assets of the IGJV,Satori will not be a debtor.[92] In my view, the claims made by Mr Griffiths about the indemnity debt, and inparticular the dispute about whether the plaintiff is entitled to enforce the indemnityprovision under cl 4.3, is part of a pattern of ever-widening claims made in an attemptto defeat the liquidation application. This appears to be an evolving pattern.42 Determination of Hon Paul Heath KC dated 1 April 2022, at [13(a)] and [13(b)].[93] It is of course not enough for Mr Griffiths to make bare allegations;Mr Griffiths needs to demonstrate there is some substance or arguable merit to suchcontentions. He has not done so.Conclusion – Satori's insolvency[94] It is clear on the evidence before me that Satori is deeply insolvent. That isapparent from the recent report of the interim liquidators.[95] The evidence before the Court is that Satori has no assets of any material value.Mr Griffiths has elected not to provide any evidence to the contrary. IGFL hasestablished insolvency on both a balance-sheet basis and a cash-flow basis. I acceptthat Satori is not a trading company.Issue (d) – Jurisdiction/forum conveniens[96] I reject the contention of Mr Griffiths that this Court lacks jurisdiction to makethe substantive liquidation orders sought.[97] I accept that jurisdiction is a separate issue from whether there are relevantlegal proceedings before the courts in Fiji which ought to be determined before thisCourt should proceed and make any substantive liquidation orders. The focus ofMS O'Gorman's submissions at the hearing was on the latter.[98] Satori is incorporated in New Zealand, is registered under Part 2 of theCompanies Act 1993 and is a company for the purposes of that Act. This proceedingis of course an application made pursuant to the Act, under s 241, for this Court toexercise its statutory jurisdiction. In these circumstances, the claim that the Courtlacks jurisdiction is without merit.[99] Ms O'Gorman's submission that the only assets of value of Satori are locatedin Fiji also needs to be considered in context. Satori's only asset is its right to beindemnified from the assets of the Satori Family Trust, of which it is a trustee. TheSatori Family Trust is a foreign trust registered in New Zealand. The right ofindemnification is therefore a New Zealand asset and Satori's creditors have a right tobe subrogated to that indemnity. IGFL claims to be one such creditor and it isincorporated in New Zealand.[100] As to the assets of the Trust, namely the Satori Family Trust, the Trust ownsshares in IGFL and VBFL, both of which are incorporated in New Zealand. VBFL isthe trustee company for the VBJV.[101] The Satori Family Trust also holds Satori's interests in the IGJV and VBJV.Both of those joint ventures are unincorporated and are governed by joint ventureagreements subject to New Zealand law. As to the loan of approximately FJD3,000,000 by Satori to VBFL, that is a loan from one New Zealand company to anotherNew Zealand company, albeit denominated in Fiji dollars.[102] The decision of this Court in Sequitur Hotels Pty Ltd v Satori Holdings Ltd43does not, in my view, assist Mr Griffiths. That proceeding concerned statutorycontractual causes of action against Satori and Mr Griffiths arising from allegedmisleading and deceptive conduct. It was common ground that the impugned conductdid not take place in New Zealand.[103] Whata J held that Fiji was the natural forum for claims against Mr Griffiths.On balance, his Honour favoured Fiji as the preferable forum for the proceedingoverall, particularly as Mr Griffiths was the "main actor"; at that time, he was residentin Fiji and the conduct by him initially took place in Fiji. However, and critically, hisHonour also held that New Zealand is the more natural forum in respect of thecontractual claims against Satori.44[104] I further note that the debts of Satori pleaded in the statement of claim, namelythe capital call debt and the indemnity debt, arise under the ARJVA, which has a NewZealand law and New Zealand forum clause.[105] I find that this Court has jurisdiction to make the liquidation orders sought andis forum conveniens for determination of IGFL's s 241 application.43 Sequitur Hotels Pty Ltd v Satori Holdings Ltd [2020] NZHC 2032.44 Sequitur Hotels Pty Ltd v Satori Holdings Ltd, above n 44, at [81]–[82].Is it just and equitable to order liquidation?[106] A basis for a winding up order under the just and equitable ground will beestablished if there is a justifiable loss of confidence in the conduct and managementof the company, evidenced by fraudulent or improper administration of the company'saffairs, although it is not necessary for the business of the company to involveillegality.45 As Saville LJ observed in Re Senator HanseatischeVerwaltungsgesellschaft mbH:46On the contrary the phrases used (namely "expedient in the public interest"and "just and equitable") to my mind indicate that Parliament did not intendto impose such a restriction but instead simply decided to leave it to theSecretary of State to form a view as to what was expedient in the publicinterest and the court to then decide on the material before it whether thejustice and equity of the case dictated that the company concerned should bewound up.[107] On their face, the circumstances in which Mr Griffiths sought and obtainedorders from the Fijian Family Court are of concern. Mr Griffiths purported to replaceSatori as a party to the VBJV with the Delaware corporation associated with his wifeand to transfer Satori's 31.66 per cent shareholding in VBFL to that Delawarecorporation. However, it is not possible for me to reach a concluded view on thatmatter. I would, nevertheless, observe that the order sought by the receivers stayingthat consent order, whilst protecting the position in the interim, does not address thequestion of whether there was a valid basis for the order in the first instance. Nor hasMr Griffiths provided a full explanation of the circumstances giving rise to the consentorder.[108] IGFL alleges not only profound insolvency on both a balance-sheet basis anda cash-flow basis, but also alleges that Satori has continued to incur obligations whileinsolvent since July 2020 when it stopped meeting its capital call obligations. It alsosays that Mr Griffiths has allowed Satori to do this.45 Insolvency Law and Practice (online ed, Thomson Reuters) at [CA241.03] and Loch v JohnBlackwood Ltd [1924] AC 783 (PC).46 Re Senator Hanseatische Verwaltungsgesellschaft mbH [1997] 1 WLR 515 (CA) at 523.[109] I agree with the submission of IGFL that there is a proper basis for aninvestigation by the liquidators into the company's affairs in light of the allegationsmade and the circumstances of the Family Court consent order.[110] In the circumstances, including where it has been established that Satori iscash-flow insolvent and balance-sheet insolvent, I find that it would be just andequitable to make a substantive liquidation order.Conclusion[111] I decline to grant Mr Griffiths special leave to file a statement of defence outof time and/or to pursue any of the interlocutory applications. That includes theapplication seeking a stay of the proceedings, a restraint of advertising and theapplication to set aside the interim liquidation. Mr Griffiths has failed to establish tothe arguable basis threshold that Satori is solvent and not liable for the debts at issue.There is no legitimate basis for staying the proceedings pending determination of therelated proceedings in Fiji. That includes the proceedings in which there is a challengeto the appointment of the receivers.[112] I accept that IGFL may, at times, have pursued litigation against Mr Griffithsand/or Satori in an aggressive fashion, but there is no basis for concluding thesewinding up proceedings savour of either unfairness or undue pressure. I note also thatMr Griffiths has himself instituted many legal proceedings against Sequitur and othersin both New Zealand and Fiji.[113] I find that IGFL has established that Satori is unable to pay its debts and that itwould also be just and equitable to make the liquidation order sought. The statutorycriteria in s 241 is made out. Even if there is some arguable basis that Satori is notliable for the full extent of the debts claims, Satori remains unable to pay a substantialportion of that debt and IGFL has established that Satori is insolvent. In reaching thoseconclusions, I have had regard to the opposition of Mr Griffiths despite my findingsthat he should be refused leave to file a statement of defence out of time.[114] I find that this Court does have jurisdiction to make the liquidation order soughtand there is no basis for concluding that the Fijian courts are forum conveniens.[115] It is not necessary for me to determine the question of whether Mr Griffiths hasstanding to oppose the liquidation on the basis that he has failed to establish anarguable case of solvency. He does have standing, as a shareholder, to seek to file astatement of defence out of time, however, as noted, I found that he should not begranted leave to do so.Result[116] The protest to jurisdiction and opposition to the liquidation proceedings filedby Mr Griffiths is dismissed.[117] I decline to grant leave for Mr Griffiths to file a statement of defence out oftime and dismiss all of his interlocutory applications. That includes the twoapplications under High Court Rules 2016 r 9.75 for examination of Mr Rees Loganand to obtain documents. Neither of those two applications were pursued with anyrigour and were not addressed at all in the oral submissions of Ms O'Gorman.[118] I make an order pursuant to s 241 of the Companies Act 1993 placing thedefendant, Satori Holdings Ltd, into liquidation. I dispense with any requirement foradvertising.[119] I appoint Mr Mark McDonald and Mr Raymond Cox as the liquidators. Theirrates of remuneration and terms and conditions of their appointment are as set out intheir consent to act dated 30 November 2022.[120] My orders are timed at 4.55 pm on 17 February 2023.[121] As to costs, I am of the preliminary view that the plaintiff, IGFL, havingsucceeded, is entitled to costs and on a 2B basis. If costs cannot be agreed, thenmemoranda (no more than four pages) are to be filed and served within 21 days.__________________________Associate Judge P J Andrew