BANK OF NEW ZEALAND v GRANT [2023] NZHC 1507

BANK OF NEW ZEALAND v GRANT [2023] NZHC 1507

The Court granted the bank leave under s 284(1)(g) and declared the respondents' appointments as liquidators of the subsidiary companies invalid because, on construction of the GSAs and given the parent company's Event of Default, the parent had surrendered the conditional right to deal with secured property and the bank (via appointment of receivers and the GSA's express powers to exercise the company's 'Rights') retained the entitlement to exercise the parent's shareholder voting power to appoint liquidators of the subsidiaries; the liquidators' custody of the parent's assets did not include power to exercise that surrendered shareholder entitlement and therefore the respondents'...

Citation
[2023] NZHC 1507
Parties
First Applicant: Bank of New Zealand; Second Applicants: Neale Jackson; Brendon James Gibson; Grant Robert Graham; Respondents: Damien Grant; Adam Stevenson Botterill
Court
High Court
Jurisdiction
New Zealand
Judgment Date
19 June 2023
Procedural Posture
Application for Declaration Under Companies Act S 284 and Ancillary Part 19 High Court Rules Application / High Court Judgment on Leave and on Validity of Liquidators' Appointment (final Determination on Declaration; Costs Reserved)
Outcome
Leave granted to Bank of New Zealand to seek declaration under s 284(1)(g); declaration that the respondents' appointments as liquidators of the subsidiary companies are invalid; costs reserved
Legal Topics
Validity of Liquidators' Appointment, Standing and Leave Under S 284 Companies Act, Construction of General Security Agreement, Rights of Secured Creditors Vs Liquidation, Shareholder Voting Rights in Insolvency
Company Law Insolvency Receivership Secured Transactions Contract Interpretation Validity of Liquidators' Appointment Standing and Leave Under S 284 Companies Act Construction of General Security Agreement +2 more

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Parties

Bank of New Zealand

First Applicant

Neale Jackson; Brendon James Gibson; Grant Robert Graham

Second Applicants

Damien Grant; Adam Stevenson Botterill

Respondents

Procedural Posture

Application for Declaration Under Companies Act S 284 and Ancillary Part 19 High Court Rules Application / High Court Judgment on Leave and on Validity of Liquidators' Appointment (final Determination on Declaration; Costs Reserved)

Legal Issues

  1. 1 Whether the bank has standing/leave under s 284 to seek declaration
  2. 2 Whether the respondents' appointments as liquidators of the subsidiary companies are valid
  3. 3 Whether the GSA and receivership deprived the parent company of the power to appoint liquidators to subsidiaries

Ratio Decidendi

The Court granted the bank leave under s 284(1)(g) and declared the respondents' appointments as liquidators of the subsidiary companies invalid because, on construction of the GSAs and given the parent company's Event of Default, the parent had surrendered the conditional right to deal with secured property and the bank (via appointment of receivers and the GSA's express powers to exercise the company's 'Rights') retained the entitlement to exercise the parent's shareholder voting power to appoint liquidators of the subsidiaries; the liquidators' custody of the parent's assets did not include power to exercise that surrendered shareholder entitlement and therefore the respondents'...

Court Disposition

Leave granted to Bank of New Zealand to seek declaration under s 284(1)(g); declaration that the respondents' appointments as liquidators of the subsidiary companies are invalid; costs reserved

Orders

  • Leave granted to Bank of New Zealand under s 284(1)(g) to seek declaratory relief
  • Declaration that the appointments of Damien Grant and Adam Stevenson Botterill as liquidators of Ex-CM Assets Limited, Ex-CM Limited, Profiles Woodproducts Limited, Ex-CM International Limited, Ex-CM Europe Limited and Ex-CM US Limited are invalid