ADAMS AND BUCHANAN (AS LIQUDIATORS OF STARPLUS HOMES LTD (IN LIQUIDATION)) v SUN [2014] NZHC 913

ADAMS AND BUCHANAN (AS LIQUDIATORS OF STARPLUS HOMES LTD (IN LIQUIDATION)) v SUN [2014] NZHC 913

The Court held the liquidators were necessary parties and r14.6(4)(c) applied; their decision to bring a s284 directions application was justified given limitations of s200 to mortgagees and the need to place liquidation context and statutory protection before the Court; however because substantial work also benefited preferential and unsecured creditors, one-third of the claimed costs should be deducted and two-thirds paid from the fund, resulting in an award of $24,650.34 plus agreed disbursements and filing/service costs; leave reserved on detailed incidence among claimants.

Citation
[2014] NZHC 913
Parties
Applicant (liquidator of Starplus Homes Ltd (in Liquidation)): Shaun Neil Adams; Applicant (liquidator of Starplus Homes Ltd (in Liquidation)): John Robert Buchanan; First Respondent: David Wei Sun; Second Respondent: Magsons Hardware Ltd; Third Respondent: Hamilton Hardware Retail Ltd; Fourth Respondent: United Timber Merchants Ltd; Fifth Respondent: Dale King Building Supplies Ltd; Sixth Respondent: RD 1 Ltd
Court
High Court
Jurisdiction
New Zealand
Judgment Date
6 May 2014
Procedural Posture
Directions Application Under the Companies Act 1993 Concerning Distribution of Surplus Funds From Mortgagee Sale / Costs Determination Following Directions Hearing and Substantive Judgment
Outcome
Liquidators awarded part indemnity costs to be paid from the fund held in Court; residual questions on incidence reserved
Legal Topics
Liquidator's Costs, Distribution of Surplus Funds, Indemnity Costs, Section 284 Companies Act 1993, Section 200 Property Law Act 2007, High Court Rules R14.6, Priority of Creditors
Company Law Insolvency Property Law Civil Procedure Costs Law Liquidator's Costs Distribution of Surplus Funds Indemnity Costs +4 more

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Parties

Shaun Neil Adams

Applicant (liquidator of Starplus Homes Ltd (in Liquidation))

John Robert Buchanan

Applicant (liquidator of Starplus Homes Ltd (in Liquidation))

David Wei Sun

First Respondent

Magsons Hardware Ltd

Second Respondent

Hamilton Hardware Retail Ltd

Third Respondent

United Timber Merchants Ltd

Fourth Respondent

Dale King Building Supplies Ltd

Fifth Respondent

RD 1 Ltd

Sixth Respondent

Procedural Posture

Directions Application Under the Companies Act 1993 Concerning Distribution of Surplus Funds From Mortgagee Sale / Costs Determination Following Directions Hearing and Substantive Judgment

Legal Issues

  1. 1 Whether liquidators were a necessary party to proceedings affecting the fund
  2. 2 Whether indemnity costs under r14.6(4)(c) should be awarded to the liquidators
  3. 3 Whether the liquidators acted reasonably in bringing a separate s284 directions application instead of using the s200 proceeding

Ratio Decidendi

The Court held the liquidators were necessary parties and r14.6(4)(c) applied; their decision to bring a s284 directions application was justified given limitations of s200 to mortgagees and the need to place liquidation context and statutory protection before the Court; however because substantial work also benefited preferential and unsecured creditors, one-third of the claimed costs should be deducted and two-thirds paid from the fund, resulting in an award of $24,650.34 plus agreed disbursements and filing/service costs; leave reserved on detailed incidence among claimants.

Court Disposition

Liquidators awarded part indemnity costs to be paid from the fund held in Court; residual questions on incidence reserved

Orders

  • Liquidators to be paid $24,650.34 out of the surplus funds on account of costs
  • Agreed disbursements (including filing fees $643.48) and costs of service ($565) to be paid out of the fund