RESERVE BANK OF NEW ZEALAND v CBL INSURANCE LTD [2018] NZHC 264

RESERVE BANK OF NEW ZEALAND v CBL INSURANCE LTD [2018] NZHC 264 [27 February 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-000306[2018] NZHC 264UNDER Part 4 of the Insurance (PrudentialSupervision) Act 2010 and Part 16 of theCompanies Act 1993IN THE MATTER of an application to appoint liquidators to thedefendant companyBETWEEN RESERVE BANK OF NEW ZEALANDPlaintiffAND CBL INSURANCE LIMITEDDefendantHearing: 23 February 2018Appearances: S A Barker for PlaintiffS C D A Gollin, M D Pascariu and S G Schenone in Person forDefendantJudgment: 27 February 2018JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtneyon 27 February 2018 at 4.00 pmpursuant to R 11.5 of the High Court RulesRegistrar / Deputy RegistrarDate.[1] CBL Insurance Ltd (CBLI) is a licensed insurer that is subject to the Insurance(Prudential Supervision) Act 2010 (IPSA). It is a subsidiary of CBL Corporationwhich is listed on both the New Zealand and Australian stock exchanges. Variousentities within the group operate in different areas of the insurance business, includingas both insurer and re-insurer and in a number of jurisdictions. In recent months therehave been well-publicised adverse developments relating to the group's business inEurope.[2] Under IPSA, the Reserve Bank of New Zealand (RBNZ) is designated theprudential supervisor of insurers carrying on business in New Zealand, includingCBLI. Late on Friday, 23 February 2018, RBNZ commenced proceedings againstCBLI seeking an order that it be placed in liquidation and, pending determination ofthe substantive proceeding, applied for an order under s 246 of the Companies Act1993 to have an interim liquidator appointed. I heard this application on a Pickwickbasis with counsel for RBNZ attending by telephone, and counsel for CBLI attendingin person.[3] After hearing from counsel at some length and also allowing counsel to consulttheir respective clients on one issue, I made an order appointing Kare Johnstone andAndrew John Grenfell as interim liquidators of CBLI. The terms of the sealed orderrelevantly provide:3.1 Kare Johnstone and Andrew John Grenfell be appointed as interimliquidators of the defendant company, with all powers and authoritiesas given to liquidators under the Companies Act 1993 (Act) that arenecessary to maintain the assets of the defendant company (suchpowers and authorities able to be exercised jointly or individually bythe liquidators):(a) Including pursuant to:(i) Section 248(1)(a) of the Act (take custody and control ofassets).(ii) Section 253 of the Act (protect and realise assetsincluding seeking freezing orders under Part 32 of theHigh Court Rules (except for the right to distribute therealisation of proceeds of assets other than for paymentof fees and expenses on terms of sub-paragraphs 3(c) and(d) below)), in particular, to take control of all globalassets of the defendant company, irrespective of in whichcountry they are located, including:(1) To take control of all financial and other records ofthe defendant company.(2) To conduct any investigations they considerappropriate or necessary.(3) To investigate and, if necessary, to initiate recoveryaction in respect of monies owing to the defendantcompany.(4) To instruct counsel, whether inside or outside NewZealand, to advise and assist them in the exercise oftheir powers.(iii) Section 261 of the Act (obtain documents andinformation).(iv) Sections 265 and 266 of the Act (examine on oath).(v) Schedule 6, clause 1(b) (carry on the business of thedefendant company to the extent that the interimliquidators consider necessary).(b) Excluding, pursuant to:(1) Section 249 of the Act (completion of liquidation).(2) Sections 292 to 297 of the Act (voidabletransactions and securities).(3) Sections 297 to 298 of the Act (undervaluetransactions).(4) Sections 312 and 313 of the Act (preferential claimsand distribution).3.2 With effect from the commencement of the interim liquidation, unlessthe interim liquidators agree or the court orders otherwise, a personmust not:(a) Commence or continue legal proceedings against thedefendant company; or(b) Exercise or enforce, or continue to exercise or enforce, theright or remedy over or against property of the defendantcompany.3.3 The fees of the interim liquidators, and of employees of their firm(McGrathNicol), be charged at rates normally charged forassignments of this kind.3.4 The fees and expenses of the interim liquidators, including expensesincurred in managing of the business of the defendant company fromthe time of their appointment, be treated and paid in accordance withsection 278 and paragraph 1 of the Seventh Schedule of the Act.3.5 Preventing any searches of the Court file except by application on noless than three (3) days' notice to the Bank and the defendantcompany.3.6 There be no publication of information submitted to the Court inrelation to this application. The fact and terms of the order and thenames of the interim liquidators may be published3.7 The costs of this interlocutory order are reserved.3.8 Leave is reserved to the respondent to apply to replace the interimliquidators appointed under this order.3.9 Leave reserved to apply for directions if needed.[4] In the usual course, I would record the reasons for my decision in full. In thiscase, however, the terms of the order prevent information other than the fact and termsof the order and the names of the interim liquidators being published. I accordinglydo no more than record the fact that I was provided with an extensive memorandumof counsel and affidavit in support of the application, that counsel for CBLI were givenan appropriate opportunity to respond (within the constraints of the Pickwick process)and that I was satisfied both that the statutory criteria for the order was met and thatappointment of interim liquidators was the proper course to take.____________________P Courtney J