HOLLIS AND FISK V VCOMMS LIMITED HC WN CIV-2009-485-620 [2009] NZHC 427 (8 April 2009)

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
                                                                   CIV-2009-485-620

               UNDER                      Part 19 of the High Court Rules and
                                          sections
239F and 280 of the Companies
                                          Act 1993

               IN THE MATTER OF           an application
pursuant to section 280 of
                                          the Companies Act 1993 for an order that
                  
                       Malcolm Grant Hollis and John Howard
                                          Ross Fisk not be disqualified
from
                                          appointment as administrators of
                                          VCOMMS
Limited

               BETWEEN                    MALCOLM GRANT HOLLIS AND
                                          JOHN HOWARD
ROSS FISK
                                          Applicants

               AND                        VCOMMS LIMITED
       
                                  Respondent


On papers

Judgment:      8 April 2009



                           JUDGMENT OF DOBSON
J



[1]    The papers in this matter were referred to me as a matter of urgency on the
afternoon of 3 April 2009, given the unavailability
of the Associate Judge. Two
applications, intended to be considered by the Court without notice, had been filed
on 31 March 2009.
      The first sought permission to commence the substantive
proceedings by way of an originating application, and the second was
an originating
application without notice for orders that the applicants (Messrs Hollis and Fisk) not
be disqualified from appointment
as administrators of the respondent (VCOMMS).




HOLLIS AND FISK V VCOMMS LIMITED HC WN CIV-2009-485-620 8 April 2009

[2]    The
degree of urgency was such that by 3 April 2009, Mr Hollis swore a
second affidavit asking the Court to consider the applications
as soon as possible so
that a voluntary administration might be commenced.


[3]    After considering all the papers, I made the
orders without hearing from
counsel, essentially in the terms sought. This is the first opportunity I have had to
record briefly
my reasons for doing so.


[4]    As to the first application, r 19.5 of the High Court Rules affords the Court a
discretion to permit
any proceeding not specifically recognised in rr 19.2 to 19.4 to
be commenced by way of an originating application.          The
list of applications
recognised as potentially appropriate in McGechan on Procedure at HR19.5.01
illustrates the utility of resort
to the originating application procedure in diverse
circumstances. I am satisfied that the present is an appropriate circumstance
in
which to invoke the procedure. Accordingly, I authorised the commencement of
these proceedings by originating application being
satisfied it is in the interests of
justice to do so.


[5]    As to the substantive application, I inevitably had to rely first
on the
thoroughness of disclosure of all relevant circumstances by the applicants, and
secondly their bona fides as experienced insolvency
practitioners in a nationally
recognised firm.    The potential conflict they identified was that their firm,
PricewaterhouseCoopers
(PwC), has a continuing business relationship with
ANZ National Bank Limited (ANZ), which bank is a secured creditor of VCOMMS.
Mr
Hollis has confirmed on his own behalf and on behalf of Mr Fisk that neither of
them has advised ANZ in relation to VCOMMS, and they
are both aware of their
obligations to act independently and professionally in their role as administrators of
the company, should
they be appointed. In addition, in their work for VCOMMS,
they commit to only using PwC personnel who have not acted for ANZ. Mr
Hollis
also expressed the belief that none of the services provided by his firm to the ANZ
relate to VCOMMS, its directors or shareholders.


[6]    An affidavit from a director of VCOMMS expressed support for the
appointment of Messrs Hollis and Fisk, and also expressed the view that he did not

consider PwC's unrelated work for ANZ could prejudice either VCOMMS or its
creditors.


[7]     There is good reason for the provisions
in the Companies Act 1993 that
disqualify certain persons with potentially conflicting interests from accepting
appointment as liquidators
of a company, and the same rationale applies to extending
those restrictions to appointments as administrators. However, the circumstances
of
each potential appointment need to be evaluated on their own terms.              On the
information provided in the papers before
me, I was satisfied that the constraint
excluding Messrs Hollis and Fisk ought not to apply, at least in the first instance.


[8]
    I did not see the extent of work already done by Messrs Hollis and Fisk as
adding to the grounds for their application. It appears
that significant work had been
undertaken, which would be wasted if they could not accept appointment. Also, time
is of the essence
in the attempts to save the company. Whilst in pragmatic terms that
might seem to add to the justification for appointment, in principle
it must be
excluded as irrelevant.      If there were grounds for concern at the nature of the
conflict, then they should not be
swept aside because the participants had committed
resources on a wrong assumption that consent would nonetheless be available.


[9]     The orders made are capable of being revisited and I accordingly do not
expand on the grounds for the orders I made. Having
been made without notice, if
there is any challenge to their appointment (the terms of orders facilitating that
within an appropriate
time limit), then the entitlement of Messrs Hollis and Fisk to
act as administrators would need to be considered afresh, in light
of any additional
information placed before the Court.




                                                                     
Dobson J



Solicitors:
Anthony Harper Lawyers, Christchurch for applicants