LIMITLESS CONSTRUCTION LTD (IN LIQUIDATION) v MCNEIL [2016] NZHC 3007

LIMITLESS CONSTRUCTION LTD (IN LIQUIDATION) v MCNEIL [2016] NZHC 3007

The Court endorsed the parties' negotiated interim arrangements as adequate protection of the company's interests: $39,000 to be held in agreed solicitors' trust, the balance of net proceeds may be used by Mrs McNeil to settle an imminent purchase provided she grants a mortgage to the company in liquidation securing...

Source-derived case information.

Citation
[2016] NZHC 3007
Parties
Plaintiff: Limitless Construction Ltd (in liquidation); First Defendant: Phillip McNeil; Second Defendant: Phillip McNeil; Lesley McNeil; Clifford Earnest Teasdale
Court
High Court
Jurisdiction
New Zealand
Judgment Date
12 December 2016
Procedural Posture
Company Liquidation Freezing Order Application / Hearing on Freezing Order Application (interim); Case Management Directions Issued
Outcome
Freezing order application adjourned and interim arrangements approved; case management directions given; costs awarded to the liquidator.
Legal Topics
Freezing Order (preservation of Assets), Directors' Duties, Knowing Receipt, Liquidator Powers, Costs
Company Law Injunctions Trusts Civil Procedure Freezing Order (preservation of Assets) Directors' Duties Knowing Receipt Liquidator Powers +1 more

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Parties

Limitless Construction Ltd (in liquidation)

Plaintiff

Phillip McNeil

First Defendant

Phillip McNeil; Lesley McNeil; Clifford Earnest Teasdale

Second Defendant

Procedural Posture

Company Liquidation Freezing Order Application / Hearing on Freezing Order Application (interim); Case Management Directions Issued

Legal Issues

  1. 1 Whether a freezing order (restraint on disposition of Sunset Street property) should be continued or modified to preserve assets for creditors
  2. 2 Whether company funds were diverted to the McNeil Family Trust and whether trustees had knowledge making them liable for knowing receipt
  3. 3 Whether certain claims must be pursued by the liquidator in his own name under the Companies Act

Ratio Decidendi

The Court endorsed the parties' negotiated interim arrangements as adequate protection of the company's interests: $39,000 to be held in agreed solicitors' trust, the balance of net proceeds may be used by Mrs McNeil to settle an imminent purchase provided she grants a mortgage to the company in liquidation securing that sum, and the freezing order application is adjourned with costs awarded to the liquidator; the Court also directed procedural amendments and case management to ensure claims are pursued in the appropriate name under the Companies Act.

Court Disposition

Freezing order application adjourned and interim arrangements approved; case management directions given; costs awarded to the liquidator.

Orders

  • $39,000 of the net proceeds of sale to be paid to an agreed firm of solicitors and held on interest bearing deposit in the joint names of the parties pending the substantive proceeding
  • Balance of the net proceeds may be used by Mrs McNeil to acquire another property on the understanding she will execute a mortgage in favour of the company in liquidation securing that sum