Hyndman v Newson [2014] NZHC 2513 (13 October 2014)

Last Updated: 3 November 2014

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000474 [2014] NZHC 2513

BETWEEN	IAN BRUCE HYNDMAN Applicant
AND	KEVIN DESMOND NEWSON as liquidator for Gibbston Downs Wines Limited (in liquidation) Respondent

Hearing:	13 October 2014
Appearances:	J Moss for Applicant K P Sullivan for Respondent
Judgment:	13 October 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

_{as to removal of a liquidator}

[1] The applicant seeks an order removing the respondent (Mr Newson) as liquidator of Gibbston Downs Wines Limited (in liquidation) (Gibbston) and appointing Wayne John Deuchrass or the Official Assignee in his place.

Gibbston’s liquidation

[2] The Court put Gibbston into liquidation on the application of Property Ventures Limited (in receivership and in liquidation) (Property Ventures). Gibbston had incurred debts exceeding $1,500,000 to Property Ventures through inter entity advances.

[3] Gibbston had been unsuccessful in having a statutory demand set aside. Immediately following the failure of Gibbston’s appeals, this Court made an order

HYNDMAN v NEWSON as liquidator for Gibbston Downs Wines Limited (in liquidation) [2014] NZHC 2513 [13 October 2014]

appointing Mr Newson as interim liquidator of Gibbston.¹ A week later the Court made an order putting Gibbston into liquidation, with Mr Newson appointed as liquidator.²

[4] At the time Gibbston was put into liquidation an issue arose, not as to whether Gibbston would be put into liquidation, but as to who should be its liquidator or liquidators.

[5] The liquidators of Property Ventures (Robert Walker and John Scutter) had proposed that one of their own number, John Scutter, be appointed as liquidator. Alternatively they proposed that Mr Newson be appointed as liquidator.

[6] Counsel for Gibbston submitted that in the interests of actual and apparent independence and impartiality, Mr Newson ought not to be appointed. At the time of the hearing as to an interim liquidation, counsel for Gibbston had proposed that the Official Assignee be appointed but it was established at the time that the Assignee at Christchurch would have limited capacity to take any steps on interim appointment. At the hearing as to the final liquidation order, counsel for Gibbston submitted the names of Wayne Deuchrass and Ian Nellies as appropriate liquidators.

[7] It appeared to be common ground between counsel that all the suggested liquidators were suitably experienced in liquidation work although, as I will return to, Mr Newson suggested that he may have better qualifications to carry out this particular liquidation.

[8] Counsel for Gibbston made an overarching submission at the liquidation hearing questioning Mr Newson’s ability to act independently and impartially. Counsel made four further and specific submissions about aspects of Mr Newson’s conduct and location which I did not find compelling in their own right. One of the specific concerns raised was as to whether Mr Newson was too closely aligned to

_{Messrs Walker and Scutter as liquidators of Property Ventures, as the substantial}

¹ Property Ventures Limited (in receivership and in liquidation) v Gibbston Downs Wines Limited

_{[2014] NZHC 510.}

² Property Ventures Limited (in receivership and in liquidation) v Gibbston Downs Wines Limited

[2014] NZHC 615.

creditor of Gibbston. I found that steps taken by Mr Newson before his appointment to obtain relevant background information from those (including Property Ventures’ liquidators) best placed to provide the information did not indicate partiality for a particular creditor or other entity.³

[9] For the final liquidation hearing, Mr Newson had prepared a letter addressed to Mr Sullivan as counsel for Messrs Walker and Scutter as liquidators of Property Ventures. Mr Sullivan attached the letter in support of a submission that Mr Newson met all the criteria for appointment.

[10] In the letter, Mr Newson set out his substantial liquidation experience. He then addressed the question of his association with Mr Walker:

I have been asked by Mr Hyndman as to whether I am associated with

Robert Walker.

Mr Walker and I are associated at a number of levels. We are both members of the New Zealand Institute of Chartered Accountants along with some

40,000 other accountants. We are both public practitioners of which there

are some 4500 in NZ. We both practice accountancy in Wellington although

Mr Walker spends one week in two in Auckland. There are approximately

450 practitioners in Wellington.

I first met Mr Walker probably 20 years ago when we were members of the Wellington Branch of the Institute. To the best of my memory we served together for five years or more. I went on to stand for the national Council of the Institute and was elected and reelected for a total period of six years.

I have kept up my association with Mr Walker since that time. During my period of knowing Mr Walker I have come to have respect for his analytical mind and his in depth knowledge of accounting issues. From time to time I have sought advice from him on matters of accounting. Since he has become involved in insolvency work I have had occasion to seek input from him on various insolvency and liquidation issues. In the case of Retail Ready Holdings Limited I was asked if I would be available to act as liquidator of that company which was associated with another company of which Mr Walker was the liquidator. I agreed to that appointment.

My association with Mr Walker is similar to my association with a number of other practitioners in Wellington. I work with several practitioners in having mutual clients where one practitioner does one thing and another something else. This is common practice within the accounting profession and ensures that independence is maintained on engagements while having confidence in the competence of those doing the work. Likewise in the legal area I tend to refer clients requiring legal services to one or other law practitioners who I know and in whom I have confidence. Those professional

³ At [9]–[10].

associations also extend into the social side of business in that I have enjoyed a number of social occasions with Mr Walker as I have with other practitioners in Wellington and with a number of lawyers in Wellington. I don’t expect any of that to change in the future.

In all those associations I continue to be and act as an independent practitioner.

[11] Mr Newson, Mr Walker and counsel for Property Ventures were well aware when submitting this information to the Court that the actual and apparent independence and impartiality of Mr Newson was being challenged.

[12] In his submissions in support of the appointment of Mr Newson, Mr Sullivan had submitted:

Mr Newson is independent and not associated in any legal sense with Mr Walker – but wishes to use the knowledge of Mr Walker and Mr Scutter to seek to investigate these affairs.

[13] I appointed Mr Newson as liquidator.

[14] I explained my decision thus:⁴

Mr Newson is an experienced practitioner with both chartered accountancy and legal qualifications. He has liquidation experience, including in the liquidation of Bridgecorp Limited. He deposes as to a professional and social acquaintance with Mr Walker which is of a usual business nature and is not one which erodes a professional person’s ability to act independently and impartially.

[15] I was reinforced in reaching that conclusion by the way in which Mr Newson in his letter had drawn a parallel between the relationship with Mr Walker and with the other “approximately 450 practitioners in Wellington”. By the letter, in my judgment, the Court was invited to perceive the Newson/Walker relationship as

_{existing in that context and the Court did so.}

⁴ At [16].

What has since emerged

Mr Newson’s trusteeship of Walker family trusts

[16] After the appointment of Mr Newson as liquidator, the applicant (Mr Hyndman, being the director of Gibbston) became aware that Mr Newson had since October 2009 been, with Mr and Mr Walker, the registered proprietor of an Auckland property.

[17] It transpires that Mr Newson is the co-trustee of Mr and Mrs Walker in relation to two mirror trusts (the Auckland property being the asset of one of those trusts). Mrs Walker has provided an affidavit in which she has explained that she and Mr Walker have lived apart for approximately eight years and it was she who approached Mr Newson to act as an “independent” trustee. She explains that:

I have known Mr Newson for many years in both a personal and professional

capacity ...

[18] Mrs Walker refers to Mr Newson as having a “passive role” as trustee in relation to both the Auckland house (where Mr Walker lives) and another house in Wellington (where Mrs Walker lives).

[19] Mr Newson has provided affidavit evidence as to his involvement with the Walkers’ family trusts, which mirrors Mrs Walker’s evidence as to his role as an independent trustee. Mr Newson deposes:

My general practice is to avoid trusteeships with clients so I do not have many of these.

He adds:

I will make exceptions depending on the situation and, in particular, I would make an exception for another practitioner if so requested. The accountancy profession has a collegial aspect which it is important to foster.

[20] He deposes to having had little to do with the Walkers’ trusts since he became

a trustee.

[21] He then explains his failure at the time I appointed him liquidator to mention his trusteeships:

At the time of preparing my letter to the Court in March 2014 I did not mention this trusteeship for two reasons. Firstly, I believed (and still believe) it was not significant or material to the matter at hand and secondly I had forgotten that I was a trustee – which probably just reflects the first factor.

[22] Mr Newson, in giving this evidence, apparently did not realise the internal, logical inconsistency of the last paragraph. I accept, as Mr Moss for the applicant submitted, that a deponent cannot at the same time assess that something is insignificant and forget about the same thing. Either Mr Newson assessed it as insignificant or forgot it, not both at the same time.

Mr Newson’s attendance at a disciplinary hearing into Mr Walker’s conduct

[23] Mr Walker was the subject of a 2013 complaint which Mr Hyndman made to the New Zealand Institute of Chartered Accountants. The Disciplinary Tribunal of the Institute had a public hearing on 16 April 2014 which Mr Hyndman attended. Mr Newson also attended the hearing and introduced himself to Mr Hyndman.

[24] The Tribunal, at the conclusion of the hearing that day, found Mr Walker guilty of the charge, delivering the reasons for its decision a few days later. The Tribunal concluded that language used by Mr Walker in a telephone conversation and in parts of his liquidator’s reports was unprofessional. It found his conduct inconsistent with the good reputation of the profession and such as to bring discredit to the profession. Mr Hyndman deposes that Mr Newson stayed all day at the hearing and that it was clear from the interactions of Mr Newson and Mr Walker that they were “close friends”.

[25] In his affidavit in opposition, Mr Newson carefully says:

Mr Hyndman describes my social association as being “good friends”. I would not disagree that I am friends with Mr Walker. I have known him for probably 20 years and have shared various experiences with him. However our contact is related to our shared role as accountants.

[26] The day after the disciplinary hearing, Mr Newson sent an email to David Henderson, the founder of Property Ventures and its related companies. (Mr Hyndman deposes that Mr Henderson had not actually attended the hearing but I infer that Mr Newson knew that Mr Henderson had been involved in procuring and providing a transcript of the telephone conversation which was one subject-matter of the complaint dealt with by the Tribunal). Mr Newson, in his lengthy email to Mr Henderson, criticised Mr Henderson for his role in relation to the transcript but commenced with criticism both of the Disciplinary Tribunal and of the suggestion that the language used by Mr Walker (as recorded in the transcript) was unprofessional.

[27] Mr Newson’s email comments included:

I have been involved in the Institute for over 20 years and in that time the institute has gone through its low points but there has never been one so low as the nadir to which it sank yesterday. You have succeeded in getting the Institute to descend into the gutter and wallow in the mire of subterfuge and misrepresentation.

I spent all of yesterday at the Institute sitting through the Disciplinary Tribunal hearing where this transcript was considered. I agree with the comment of Richard Fowler that it is not Mr Walker who has brought the profession into disrepute but the Institute and the Professional Conduct Committee which has done so by giving truck to a recording obtained by lying and misrepresentation.

...

As to the content of the transcript I find the language used to be colourful and somewhat exotic – probably on a par with that used by yourself in our Tuesday telephone conversation. But it is nothing particularly unusual.

[28] In short, on the day after the Tribunal hearing Mr Newson was mounting a defence of Mr Walker’s professionalism. And in doing so mounting an attack on the profession’s Institute and its professional conduct committee for supposedly bringing themselves into disrepute.

[29] In exhibiting a copy of this email, Mr Hyndman notes Mr Newson’s scathing comments about the Tribunal. He records a particular concern in relation to Mr Newson’s impartiality as liquidator, asserting that Mr Newson:

... clearly is an avid supporter of his good friend Mr Walker.

[30] Mr Newson has by his opposition affidavit explained his presence at and attitude towards the Tribunal hearing. He deposes that his interest in attending the hearing was several-fold. I summarise his several explanations:

(a) The conduct and outcome of the Tribunal hearing was “important” because Mr Walker is the liquidator of Gibbston’s main creditor (ie Property Ventures);

(b) Mr Newson has taken an interest in the Institute’s disciplinary process

for many years and has attended a number of such hearings;

(c) He has strong ethical views against the use of surreptitious recordings (a view which he deposes is not apparently shared by the committee or the Tribunal).

The nature of the liquidator’s role and duty to act impartially

[31] Mr Moss described the source and character of the requirements of

liquidators’ impartiality in this way:

A liquidator is a creature of statute who’s primary duty is to take possession of and realise the company’s assets or the proceeds of the realisation of the assets, and distribute them to the company’s creditors in accordance with the legislation and to distribute any surplus assets or the proceeds according to the legislation. It is the liquidator’s duty to carry out these tasks in a reasonable and efficient manner.

The liquidator owes a duty to all of the creditors, shareholders and members of the company.

As was said in Gooch’s case:

In truth, it is of the utmost importance that the liquidator should, as the officer of the court, maintain an even and impartial hand between all of the individuals whose interests are involved in the winding up. He should have no leaning for or against any individual whatever ... It is for the Judge to see that he does his duty in this respect.

A liquidator is entitled to and often does accept financial assistance or information from a creditor, however it is incumbent on the liquidator that he or she does not place in jeopardy his independence in the discharge of his or her duties. The duty of independence goes further than actual and in substance independence, because a liquidator must at all times be manifestly seen as independent and impartial.

In regard to the perception of independence, the test has been said to be:

[W]hether it would be perceived by a reasonable observer that the liquidators have manifested tendency to favour certain interests at the expense of others;

and,

[that] for those who have a particular perception, that perception is the reality.

[footnotes omitted]

[32] I adopt in addition to the observations relied on by Mr Moss the further observation of Allan J in Mason v Lewis,⁵ which identifies the duties both of independence and impartiality which are owed to the Court, creditors and shareholders alike:

The liquidators certainly owe a duty to shareholders and creditors and also to the Court to act impartially and independently.

I adopt also observations of Street J in the Re Allebart Pty Ltd (in liq)⁶ as adopted by

Allan J in Mason v Lewis:⁷

It is indispensable that in point of substance the liquidator's independence should be preserved; and it is undesirable that a liquidator should permit a situation to develop in which it might appear that he has yielded up in any degree whatever his exclusive independent control in the decision-making processes and administration of a winding up.

[33] Mr Sullivan referred throughout his written synopses to “bias” (as against “apparent bias”). What is required of a liquidation is, of course, not only the absence of actual bias but also the absence of apparent bias or partiality.

[34] Mr Sullivan, in his submissions, went on to emphasise the authorities which

establish that an applicant’s case must rise above mere suspicion and rest on

_evidence.

⁵ _{Mason v Lewis HC Auckland CIV-2010-404-8, 21 December 2010 per Allan J at [27].}

⁶ _{Re Allebart Pty Ltd (in liq) [1971] 1 NSWLR (NSWSC) 24 at 28.}

⁷ Above n 5 at [28].

What the Court knew and did not know at the time of liquidation

[35] As I have explained, when the point came for the Court to put Gibbston into liquidation, the single challenge was as to who should be the liquidator, with questions raised as to Mr Newson’s ability to act independently and impartially. It was not a situation where the absence of any challenge could be taken to excuse inattention by Mr Newson to the detail of a particular relationship. The information given to the Court in support of Mr Newson’s appointment was, as I recorded it in

my judgment,⁸ of “a professional and social acquaintance with Mr Walker which is

of a usual business nature”.

[36] My judgment did not spell out but was informed by Mr Sullivan’s

memorandum which recorded that:

Mr Newson is independent and not associated in any legal sense with Mr

Walker ...

[37] Given that the Court had the discretion to appoint any suitably qualified liquidator, I would not have appointed Mr Newson if it had there been disclosed at the time what the Court now knows as to the degree of relationship between Mr Newson and the Walkers and his legal co-ownership of at least two properties representing Walker family assets. That information renders incorrect the statement made by counsel for Mr Walker that Mr Newson was not associated in any legal sense with Mr Walker. The failure of Mr Newson either to appreciate that it was information which might have been considered relevant by this Court in its consideration of who should be liquidator or to remember the very existence of the trusteeship is close to inexplicable. I find that to be reflected in the very awkward

explanation of the failure in Mr Newson’s most recent evidence.⁹

[38] There were nominated at the same time as Mr Newson, Messrs Deuchrass and Nellies, both experienced liquidators in their own right, and not possessing the relationship which Mr Newson had with the person acting as liquidator of one of Gibbston’s major creditors. Mr Newson gave evidence as to aspects of his

_{qualifications which he suggested made him better qualified for this liquidation.}

⁸ _{Above n 2 at [16].}

⁹ Quoted above at [21].

That is his view, but the Court with its experience of Messrs Deuchrass and Nellies has no reason to view them as other than qualified to undertake a liquidation such as this. They have the additional benefit in this case of the fruits of Mr Newson’s investigation and conclusions to date, which Mr Newson’s particular background in law and accounting will have made their contribution.¹⁰

[39] The trust relationship, combined with Mr Newson’s subsequent defence of Mr Walker’s professionalism, suggest that those involved in the Walker/Newson acquaintance and those describing it may have identified it (possibly perfectly sincerely) as a mere “social acquaintance” when the now observable facts suggest a significantly close relationship. The four members of the Tribunal unanimously found that much of the language used by Mr Walker in his conversation had departed from the standards of a professional. Mr Newson’s conclusion (as voiced strongly in the email the following day) appears to be that the surreptitious taping of Mr Walker’s conversation in some way exonerated Mr Walker and rendered the Tribunal itself unprofessional for receiving the transcript in order to determine whether Mr Walker had behaved unprofessionally. The fact that Mr Newson could embark upon such reasoning in his defence of Mr Walker speaks of a depth of loyalty to a colleague which excuses flaws in the way close friends do.

Conclusion

[40] Had I been informed of these aspects of the relationship and dealings between Mr Walker and Mr Newson at the time as now informed by the subsequent events of the disciplinary hearing, I would not have appointed him. I would have appointed Messrs Deuchrass and Nellies instead.

Removal and replacement of a liquidator – the jurisdiction

Court supervision of liquidation under s 284 Companies Act 1993

[41] Section 284 Companies Act 1993 provides for the Court supervision of liquidations. Relevantly to this proceeding, it provides:

_{284 Court supervision of liquidation}

¹⁰ Mr Newson’s evidence as to his substantial progress to date is summarised below at [56].

(1) On the application of the liquidator, a liquidation committee, or, with the leave of the Court, a creditor, shareholder, other entitled person, or director of a company in liquidation, the Court may—

(a) Give directions in relation to any matter arising in connection with the liquidation:

(b) ...

(2) The powers given by subsection (1) of this section are in addition to any other powers a Court may exercise in its jurisdiction relating to liquidators under this Part of this Act, ...

Leave to make a s 284 Companies Act application

[42] Mr Hyndman, the applicant in this case, has standing to be granted leave under s 284(1) of the Act because he is a director of Gibbston.

[43] It was clearly Mr Hyndman as director of Gibbston who was the governing mind of Gibbston when defending the liquidation proceeding and opposing the appointment of Mr Newson as liquidator.

[44] It is appropriate that the issue of independence and impartiality of liquidators which was raised at the time of the liquidation should be the subject of consideration by the Court in the light of the fresh information which I have reviewed. Mr Hyndman as the director of Gibbston is an appropriate person to make an application on these grounds under s 284 of the Act, so as to place the issue before the Court again. l

[45] I therefore grant Mr Hyndman the leave to make this application (which application I have dealt with at the same hearing as the substantive application for agreement of the parties).

[46] I order that Mr Hyndman may proceed on this application by leave, pursuant to s 284(1) Companies Act.

The relevance of s 286 Companies Act?

[47] By s 286(4) Companies Act, the Court may remove a liquidator from office in identified circumstances. It is generally considered that those circumstances under the 1993 Act are narrower now than applied under the Companies Act 1955.¹¹

[48] In this case, Mr Hyndman relies upon the Court’s power to give directions in relation to any matter arising in connection with the liquidation (pursuant to s 284(1) of the Act). By reason of s 284(2) the powers in s 284(1) are additional to other powers within the Court’s jurisdiction under Part 16 of the Act (which includes s 286).

[49] I accept, as submitted by Mr Moss, that s 284 gives the Court jurisdiction to remove a liquidator from office in appropriate circumstances.

[50] In this regard, I respectfully adopt the conclusions of Duffy J in Katavich v Meltzer¹² and of Associate Judge Sargisson in West v Grant.¹³ In the latter case, Associate Judge Sargisson observed:¹⁴

This is a distinct and independent jurisdiction exercisable separately from the s 286 jurisdiction and does not require any finding of misconduct on the part of a liquidator Katavich v Meltzer ...

[51] I respectfully decline to follow McMahon v Sam,¹⁵ in which Associate Judge Bell treated s 286 as a stand-alone code for removal of liquidators by the Court. The express wording of s 284(2) means that the s 284(1) powers are in addition to the other powers available to the Court under Part 16 of the Act. I conclude that the s 284(1)(a) jurisdiction includes in appropriate circumstances the removal of a liquidator. I record that Mr Sullivan himself eschewed reliance on the contrary analysis in McMahon v Sam, Mr Sullivan accepting that the Court might in

_{appropriate cases resort to s 284(1)(a) in order to remove a liquidator.}

¹¹ _{See, for instance, Brookers Companies & Securities Law, CA 286.03(1).}

¹² _{Katavich v Meltzer [2011] NZCC LR8 at [38]–[39].}

¹³ _{West v Grant [2013] NZHC 3043 at [15].}

¹⁴ _{At fn 3.}

¹⁵ McMahon v Sam [2014] NZHC 569.

The inherent jurisdiction

[52] I record Mr Moss’s reservation of his client’s right to argue also that the Court might exercise an inherent jurisdiction in this situation. I did not receive detailed submissions in that regard and make no findings based on it.

Application of the jurisdiction

[53] Mr Newson’s appointment as liquidator was an appointment by the Court.

[54] At the time of the requested appointment, his independence and his general impartiality were in issue. His degree of relationship to Mr Walker was material for the decision to be made. Material information, including importantly as to the degree of personal relationship evidenced by his trusteeships, was not fully revealed to the Court. Given that there were other liquidators who could have been appointed, not possessing any personal relationship with creditors or others involved with Gibbston, my decision would have been different.

[55] The apparent perception by those involved for Property Ventures that this was not information which needed to be disclosed to the Court in my judgment reinforces the appropriateness of a change of liquidator. There is an inference that the personal and professional respect which Messrs Newson and Walker bear for one another somehow led them to overlook what others might consider relevant. Mr Newson’s subsequent expression of views, in the form of the email about Mr Walker the day after the disciplinary hearing, provides further insight into the character of the relationship between Mr Newson and Mr Walker.

[56] Finally, in my consideration of the current application, I take into account the current state of the liquidation. Mr Newson deposes as to the information he has collected and his initial considerations. He deposes to having filed his first report as liquidator and to having received creditors’ claim forms. He identifies enquiries he is minded to pursue. In particular, he says that he has instructed his lawyers to investigate the underlying security of FTG Securities Ltd so far as it relates to Gibbston. He also deposes that he is, with his lawyers, currently considering an application to investigate and, if necessary, challenge the underlying security

interests claimed by FTG. He refers to that investigation as having been delayed by the present proceeding. In his ground of opposition he further identifies the state of the liquidation in this way:

3.9 Mr Newson is yet to take any steps in relation to realisation and distribution of assets but has identified a number of avenues which he wishes to pursue.

3.10 The application is made for an improper purpose to prevent a series of transactions which involve a number of interrelated entities all controlled by interests associated with Mr Henderson and Mr Hyndman being properly investigated.

[57] I am mindful that a change of liquidator will bring additional costs to the liquidation. On the other hand, an incoming liquidator will have the benefit of a first report already filed, a body of information assembled, and an identification of issues which have been the subject of instructions to lawyers. That is a sound platform from which a new liquidator can proceed.

[58] In any balancing exercise, a consideration of the additional costs which the liquidation will bear cannot dominate considerations which ensure that the liquidator in office is manifestly independent and impartial.

[59] On the unusual facts of this case, it is my judgment that, notwithstanding additional costs involved, the importance of manifest independence and impartiality requires a change of liquidator.

The remaining issues

[60] By reason of my earlier findings, it is unnecessary that I examine remaining issues raised by the applicant. The applicant invited the Court to examine evidence as to Mr Newson’s conduct of the liquidation after his appointment as liquidator beyond the matters relating to Mr Newson’s response to the disciplinary hearing. It is unnecessary that I reach conclusions on Mr Newson’s conduct following his appointment, save in relation to that hearing. Given my stated findings, I will not determine the application by reference to allegations that Mr Newson may have failed to diligently pursue enquiries. There is much to indicate that Mr Newson has been diligently pursuing enquiries. This judgment is not a finding of misconduct on

the part of Mr Newson in relation to those activities. The judgment turns on the importance which attaches to the requirement that a liquidator’s independence and impartiality be manifest. I view it as undesirable to venture into obiter comments concerning Mr Newson’s conduct of the liquidation. I have primary regard to the interests of Gibbston which demand, after the unfortunate start to its liquidation, a smooth professional transition from Mr Newson to Mr Nellies.

Costs

[61] Having delivered the preceding judgment I heard from counsel as to costs. Mr Moss sought costs on a 2B basis plus disbursements. Mr Sullivan submitted that in this particular liquidation it would be appropriate that costs lie where they fall. Mr Sullivan referred me particularly to the fact that Mr Newson has received nothing by way of remuneration from the liquidation to date notwithstanding much effort put into the liquidation.

[62] The issue in this case was as to the appropriateness of Mr Newson’s

appointment and continuing appointment as liquidator.

[63] Mr Newson elected to conduct a spirited opposition to the application when there was available to him the alternative to abide the decision of the Court. In these circumstances, in my judgment, it is appropriate that the applicant have an award of costs. It would be inappropriate that the company be left in all events to bear the costs but I accept something of a half-way house which emerged as a possibility in the course of submissions (although it is not the primary position of either counsel). I will make an order against Mr Newson personally but on terms which recognise what may prove to have been a valuable contribution made to the liquidation.

Order

[65] I order both in relation to this proceeding and in relation to Property Ventures

Ltd (in receivership and in liquidation) v Gibbston Downs Wines Ltd, CIV 2013-409-

170:

(a) With immediate effect, Kevin Desmond Newson is removed as liquidator of Gibbston Downs Wines Limited (in liquidation);

(b) With immediate effect, Wayne John Deuchrass is appointed liquidator of Gibbston Downs Wines Limited (in liquidation);

(c) The remuneration of Wayne John Deuchrass as liquidator is approved at his usual rates as set out in his Consent filed but subject to s

284(1)(e) Companies Act 1993;

(d) Kevin Desmond Newson shall within 10 working days provide to

Wayne John Deuchrass;

(i) a report in relation to the current state of the liquidation, the issues identified in relation to the liquidation, and any current instructions issued to other professionals such as solicitors in relation to the liquidation; and

(ii) the complete orderly file or files assembled by Mr Newson in relation to the liquidation (this direction not extending to any documents in relation to which Mr Newson is entitled to claim solicitor/client privilege).

(e) Notwithstanding his removal as liquidator today, Mr Newson shall be entitled to include in his account for remuneration the cost of providing the report referred to in the preceding paragraph.

(f) Kevin Desmond Newson personally shall pay to Iain Bruce Hyndman the costs of this application on a 2B basis together with disbursements

to be fixed by the Registrar but payable only in the event that the proceeds of the liquidation are sufficient to render more than that sum to Mr Newson on account of his remuneration.

(g) Leave is reserved to Mr Newson to apply to this Court for approval of the sum which represents his appropriate remuneration to the completion of his report to Mr Deuchrass and to apply to this Court for directions as to apportionment in the event that there is disagreement between himself and Mr Deuchrass as to apportionment of any proceeds of the liquidation.

(h) This order is timed at 5.29 pm.

Associate Judge Osborne

Solicitors:

N Smith, Christchurch

Counsel: J Moss, Barrister, Christchurch

DLA Phillips Fox, Wellington

Counsel: K P Sullivan, Barrister, Wellington