HARRIS AND ANOR v BANK OF NEW ZEALAND & ORS [2017] NZHC 2374

HARRIS AND ANOR v BANK OF NEW ZEALAND & ORS [2017] NZHC 2374

The Court held that, on the facts, Bankhouse was a related party controlled by the company's director and the general security deed conferred an inappropriate advantage and should be set aside as against the liquidators under s299 Companies Act 1993; consequentially the receivership founded on that security no longer served a purpose in the liquidation and the Court prohibited appointment of any other receiver in respect of the property under s35 Receiverships Act 1993; other relief sought by liquidators (rejection of Bankhouse claim, declaration receivers invalid and denial of remuneration, prohibition orders under s37) was declined for lack of evidential basis or because statutory tests...

Citation
[2017] NZHC 2374
Parties
Applicant Receiver: Keith Vincent Harris; Applicant Receiver: Iain Andrew Nellies; First Respondent Secured Creditor: Bank of New Zealand; Second Respondent Secured Creditor: The Bankhouse Trust Ltd; Third Respondent Creditor: Commissioner of Inland Revenue; Fourth Respondent Related Party/trust Entity: Glover No. 2 Ltd; Fifth Respondent Creditor: Ignite Architects Ltd; Sixth Respondent Creditor: Urban Living Ltd; Seventh Respondent Creditor: Minter Ellison Rudd Watts; Eighth Respondent Creditor: BBG Holdings Ltd; Ninth Respondent Liquidator: Vivian Fatupaito; Ninth Respondent Liquidator: Andrew Hawkes; Tenth Respondent Interested Party/beneficiary (self‑represented): Sarah Sparks
Court
High Court
Jurisdiction
New Zealand
Judgment Date
29 September 2017
Procedural Posture
Receivership and Liquidation Applications Under Companies Act 1993 and Receiverships Act 1993 / Judgment on Competing Applications for Directions, Set Aside Security and Related Relief
Outcome
General security deed set aside as against the liquidators; prohibition on appointment of any other receiver in respect of the property under that general security deed; other relief sought by liquidators declined; costs reserved; case management directions given.
Legal Topics
Setting Aside Security Under S299, Voidable Transactions (ss292 293), Appointment and Supervision of Receivers (ss31, 33 37), Agency Approval for Sale, Remuneration Review and Prohibition Orders, Priority and Pari Passu Principle
Companies Law Insolvency Law Receivership Property Law Personal Property Securities Law Tax Law Setting Aside Security Under S299 Voidable Transactions (ss292 293) +4 more

Case Brief

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Parties

Keith Vincent Harris

Applicant Receiver

Iain Andrew Nellies

Applicant Receiver

Bank of New Zealand

First Respondent Secured Creditor

The Bankhouse Trust Ltd

Second Respondent Secured Creditor

Commissioner of Inland Revenue

Third Respondent Creditor

Glover No. 2 Ltd

Fourth Respondent Related Party/trust Entity

Ignite Architects Ltd

Fifth Respondent Creditor

Urban Living Ltd

Sixth Respondent Creditor

Minter Ellison Rudd Watts

Seventh Respondent Creditor

BBG Holdings Ltd

Eighth Respondent Creditor

Vivian Fatupaito

Ninth Respondent Liquidator

Andrew Hawkes

Ninth Respondent Liquidator

Sarah Sparks

Tenth Respondent Interested Party/beneficiary (self‑represented)

Procedural Posture

Receivership and Liquidation Applications Under Companies Act 1993 and Receiverships Act 1993 / Judgment on Competing Applications for Directions, Set Aside Security and Related Relief

Legal Issues

  1. 1 Whether the general security deed dated 23 January 2014 should be set aside as against the liquidators under s299 Companies Act 1993
  2. 2 Whether Bankhouse is a related party and whether the charge conferred an inappropriate advantage
  3. 3 Whether the receivers were validly appointed and whether they breached duties under s18 of the Receiverships Act 1993

Ratio Decidendi

The Court held that, on the facts, Bankhouse was a related party controlled by the company's director and the general security deed conferred an inappropriate advantage and should be set aside as against the liquidators under s299 Companies Act 1993; consequentially the receivership founded on that security no longer served a purpose in the liquidation and the Court prohibited appointment of any other receiver in respect of the property under s35 Receiverships Act 1993; other relief sought by liquidators (rejection of Bankhouse claim, declaration receivers invalid and denial of remuneration, prohibition orders under s37) was declined for lack of evidential basis or because statutory tests...

Court Disposition

General security deed set aside as against the liquidators; prohibition on appointment of any other receiver in respect of the property under that general security deed; other relief sought by liquidators declined; costs reserved; case management directions given.

Orders

  • Set aside the General Security Deed dated 23 January 2014 between CIT Holdings Limited (in liquidation) and Bankhouse Trust Limited as against the liquidators (s299 Companies Act 1993)
  • Prohibit appointment of any other receiver in respect of the property in receivership under the General Security Deed (s35 Receiverships Act 1993)