MCVEIGH v DECMIL & ORS [2021] NZHC 2929

MCVEIGH v DECMIL & ORS [2021] NZHC 2929

The court concluded the consent order created an express trust for retention creditors and that, on the evidence, the applicant's earlier conduct (treating the funds as company property, depletion of the fund, incurring fees without clear court authorisation) together with undisclosed commercial arrangements with DAP gave rise to a real and reasonable appearance of conflict and potential lack of independence; accordingly the applicant was disqualified from appointment as receiver and the court appointed independent receivers (Gareth Hoole and Clive Bush) with powers under the Receiverships Act 1993, remuneration as a first charge on the fund, reporting obligations and leave to seek...

Citation
[2021] NZHC 2929
Parties
Applicant (liquidator): Dermott Joseph McVeigh; First Respondent (shareholder): Decmil Australia Pty Limited; Second Respondent (subcontractor Claimant): VAE NZ Limited; Second Respondent (subcontractor Claimant): Stanley Construction (Auckland) Limited; Subject Company (in Liquidation): Decmil Construction NZ Limited (in liquidation)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
1 November 2021
Procedural Posture
Application Under S 284 Companies Act 1993 and Part 2 a Construction Contracts Act 2002 in Liquidation/receivership Context / Hearing for Directions and Appointment of Receiver (application for Court Directions / Appointment of Receiver)
Outcome
Application to appoint the applicant as receiver refused; court appointed independent receivers Gareth Hoole and Clive Bush to manage the trust fund
Legal Topics
Liquidator Powers, Retention Monies (construction Contracts Act), Appointment of Receiver, Conflict of Interest and Apparent Bias, Consent Order Effects, Remuneration and Beddoe Issues, Directors' Duties
Companies Law Construction Law Insolvency Trusts Receivership Liquidator Powers Retention Monies (construction Contracts Act) Appointment of Receiver +4 more

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Parties

Dermott Joseph McVeigh

Applicant (liquidator)

Decmil Australia Pty Limited

First Respondent (shareholder)

VAE NZ Limited

Second Respondent (subcontractor Claimant)

Stanley Construction (Auckland) Limited

Second Respondent (subcontractor Claimant)

Decmil Construction NZ Limited (in liquidation)

Subject Company (in Liquidation)

Procedural Posture

Application Under S 284 Companies Act 1993 and Part 2 a Construction Contracts Act 2002 in Liquidation/receivership Context / Hearing for Directions and Appointment of Receiver (application for Court Directions / Appointment of Receiver)

Legal Issues

  1. 1 Whether the liquidator can manage property held on trust that is claimed by retention creditors
  2. 2 Whether a court-appointed receiver is required to manage the fund and, if so, whether the applicant (liquidator) is suitable
  3. 3 Whether the fund constituted retention monies under the CCA or was otherwise held on trust

Ratio Decidendi

The court concluded the consent order created an express trust for retention creditors and that, on the evidence, the applicant's earlier conduct (treating the funds as company property, depletion of the fund, incurring fees without clear court authorisation) together with undisclosed commercial arrangements with DAP gave rise to a real and reasonable appearance of conflict and potential lack of independence; accordingly the applicant was disqualified from appointment as receiver and the court appointed independent receivers (Gareth Hoole and Clive Bush) with powers under the Receiverships Act 1993, remuneration as a first charge on the fund, reporting obligations and leave to seek...

Court Disposition

Application to appoint the applicant as receiver refused; court appointed independent receivers Gareth Hoole and Clive Bush to manage the trust fund

Orders

  • Appoint Gareth Hoole and Clive Bush as receivers and managers of the trust fund
  • Grant receivers the powers of a receiver under the Receiverships Act 1993