Eagle [2016] NZHC 10 (15 January 2016)

Last Updated: 8 March 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-00061 [2016] NZHC 10

IN THE MATTER	of an application under s 32(3) of the Receiverships Act 1993
IN THE MATTER	of an application under ss 239Y(4) and 239ADR of the Companies Act 1993
IN THE MATTER	of DSE (NZ) LIMITED (in receivership and in voluntary administration)
BETWEEN	RYAN EAGLE, JIM SARANTINOS AND JAMES STEWART First Applicants
AND	ANDREW GRENFELL, JASON PRESTON, JOSEPH HAYES AND KARE JOHNSTONE Second Applicants

Hearing:	15 January 2016
Appearances:	M J Tingey and T B Fitzgerald for first applicants G M Sandelin for second applicants
Judgment:	15 January 2015

_{JUDGMENT OF LANG J}

This judgment was delivered by me on 15 January 2015 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors:

Bell Gully, Auckland

Minter Ellison Rudd Watts, Auckland

EAGLE & ORS [2016] NZHC 10 [15 January 2015]

[1] The receivers and administrators of DSE (NZ) Limited (the company) seek a number of orders on an urgent basis. The orders sought are as follows:

a) An order under s 32(3) of the Receiverships Act 1993 extending until

18 July 2016 the period within which notice of termination of employment contracts is required to be given by the receivers to employees of the company under s 32(1)(b) of the Receiverships Act

1993;

b) An order under s 239Y(4) of the Companies Act 1993 extending until

18 July 2016 the period within which notice of termination of employment contracts is required to be given by the administrators to employees of the company under s 239Y(3) of the Companies Act

1993; and

c) An order limiting the receivers’ liability under s 32(7)(a) of the Receiverships Act 1993 for rent and other payments becoming due under agreements relating to the use, possession and occupation of property in receivership to that portion of the rent or other payments which accrue in the period commencing on 18 July 2016.

[2] The receivers seek the orders because they wish to sell the company’s business (operated under the name “Dick Smith Electronics”)” as a going concern. In order to do that, the company needs to continue trading using its existing staff, premises and assets.

[3] The applications have had to be dealt with as a matter of urgency, because the 14 day notice periods referred to in s 32(3) of the Receivers Act 1993 and s

239DY(4) of the Companies Act 1993 expire on 18 January 2016.

[4] I am satisfied that it is clearly in the interests of all affected parties to make the first two orders sought. The third order raises a more complex issue. The receivers accept that they should meet the usual periodic outgoings payable in respect of premises and property that they wish to continue to use. They are not prepared, however, to adopt existing lease agreements and thereby assume all of the liabilities and obligations of the lessee. They have therefore written to all currently known lessors indicating that they are prepared to continue to make periodic payments of rental until such time as the receivership ceases or the business is sold.

On that basis they ask the court to limit their liability for rent and other payments to that which may accrue after 18 July 2016.

[5] In my view the guaranteed payment of rental alone is not sufficient to adequately protect the interests of lessors. The receivers should also be required to meet all other periodic outgoings payable under existing lease agreements. This would include items such as common area charges, advertising and insurance where the lease provides that those are the responsibility of the lessee. Furthermore, I have a concern that the assurances that the receivers have given lessors to date may not create legally enforceable rights.

[6] Counsel for the receivers has now taken further instructions from the receivers, and has tendered an undertaking to the Court that the receivers will meet all periodic outgoings payable under existing leases. I have approved the form of the undertaking, and it is to be annexed to the sealed orders. The orders will take effect as soon as Mr Eagle signs the undertaking on behalf of the receivers.

[7] I consider that all of the orders are in the interests of both employees and lessors. For that reason I direct that second applicants are permitted to apply by way of originating application, and that service of the application is to be dispensed with. I now make orders in terms of the draft orders that have been provided by counsel for the applicants.

Lang J