Home | Databases | WorldLII | Search | Feedback High Court of New Zealand Decisions

Nayacakalou v Minister of Education [2017] NZHC 792 (27 April 2017)

Last Updated: 22 May 2017

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2016-419-000279 [2017] NZHC 792

_{JUDGMENT OF WYLIE J}

This judgment was delivered by Justice Wylie

On 27 April 2017 at 11.00am Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:..............................

Solicitors/counsel:

Hunwick Law Ltd/D Hayes, Hamilton

Meredith Connell, Auckland

NAYACAKALOU v MINISTER OF EDUCATION [2017] NZHC 792 [27 April 2017]

Introduction

[1] The applicant, Ms Nayacakalou, is the liquidator of Osborne Building 2000

Ltd (in liquidation) (“the company”). She has filed an originating application under s 284(1)(a) of the Companies Act 1993 (“the Act”) seeking directions in relation to the discharge of her duties as liquidator.

[2] The respondent – the Minister of Education – has cross-claimed under s 286

of the Act seeking orders to enforce the liquidator’s duties.

Background facts

[3] The company was engaged in the building construction industry. Between May and September 2005, it was engaged to provide construction services in relation to a new administration building at Hillcrest Normal School in Hamilton. The new administration building was known as Block M.

[4] Block M was constructed by the company between September 2005 and

February 2006.

[5] It has since transpired that Block M suffers from various construction defects

– in particular in relation to weather tightness. The Minister says that it does not comply with the New Zealand Building Code and that it requires substantial remedial works.

[6] In October 2014, the Minister, the Secretary for Education and the Board of Trustees of Hillcrest Normal School filed a statement of claim in this Court, under number CIV-2014-404-002682. The proceedings are against the architect, the company, a plumbing company, the Hamilton City Council and a waterproofing company. The alleged costs of remediation are pleaded at $324,000 (exclusive of GST). The cause of action against the company is based on the tort of negligence – not contract. The claimants accept that any cause of action in contract is time barred.

[7] On 21 November 2014, the company filed a statement of defence.

[8] Further pleadings were exchanged and in February 2015 the parties jointly agreed to adjourn the first case management conference so that they could explore the possibility of settlement. The proceedings were due to be called again in May

2015. They were again adjourned by consent.

[9] In the event, no settlement was reached and, in September 2015, the Court made various orders to move the proceedings towards determination. Inter alia, it required the parties to attend to discovery and, in December 2015, the company filed its affidavit of documents.

[10] In March 2016, the parties agreed orders to progress the matter, which, inter alia, required the Minister and the other claimants to file an amended statement of claim. That occurred on 3 May 2016.

[11] The company did not file a statement of defence to the amended pleading. Rather, on 1 June 2016, it was placed into liquidation by special resolution of its shareholders. Ms Nayacakalou was appointed as the liquidator.

[12] On 2 June 2016, Ms Nayacakalou published on the Companies Office website her first report as liquidator. It noted that:

(a) the company owed its director $38,749; (b) the company had no assets;

(c) at the date of liquidation, the Minister was a “possible creditor”; and

(d) no meeting of creditors would be called unless, within 10 working days, a creditor gave written notice requiring that a creditors’ meeting be called.

[13] On 15 June 2016 (within the 10 day working period), the Minister and the other claimants filed a claim in the liquidation, and gave written notice pursuant to s 245(1)(b)(iii) and (c) of the Act requiring Ms Nayacakalou to call a meeting of creditors.

[14] On 28 June 2016, the Minister and the other claimants contacted Ms Nayacakalou to nominate the place for the creditors’ meeting, and provided her with a draft resolution to be included in the notice of meeting they proposed should be sent to creditors pursuant to s 243(2) of the Act.

[15] By emails dated 29 June 2016 and 4 July 2016, Ms Nayacakalou requested the Minister and the other claimants to provide copies of expert reports in support of their creditors’ claim. They provided these reports to Ms Nayacakalou on 4 July

2016, on a without prejudice/confidential basis.

[16] On 5 July 2016, Ms Nayacakalou told the Minister and the other claimants that she considered that their claim had not legally been enforceable against the company as at the date of its liquidation and there was then no liability by the company. She stated her view that that their creditor’s claim could not be admitted in the company’s liquidation. She recorded her opinion that the Minister and the other claimants did not have standing to call a meeting of creditors nor any entitlement to vote at any meeting of creditors.

[17] On 7 July 2016, the Minister and the other claimants advised that, on their reading of her letter of 5 July 2016, they did not consider that Ms Nayacakalou had made a decision to reject their claim. They requested urgent confirmation if her letter was intended to be a rejection of the claim. They again requested that Ms Nayacakalou determine that their claim was admissible in the liquidation.

[18] Ms Nayacakalou replied on 15 July 2016. She again requested various documents, which were provided on 21 July 2016. Again, the Minister and the other claimants requested that she determine their claim. On 27 July 2016, Ms Nayacakalou requested copies of yet further contractual documents to enable her to determine the claim. Those documents were provided on 9 August 2016, along with a notice under s 286 of the Act alleging that Ms Nayacakalou had failed to comply with her duties as liquidator.

[19] The status of the claim has not yet been determined by Ms Nayacakalou. Rather, she filed her originating application on 23 August 2016, and the Minister filed a notice of opposition and cross-claim shortly thereafter.

The issues

[20] Ms Nayacakalou seeks the following directions:

(a) to confirm her decision to delay calling a creditors’ meeting on the

basis that the Minister and the other claimants are not creditors;

(b) to relieve her of the duty to call a creditors’ meeting if the Minister was entitled to call a meeting of creditors;

(c) that the Minister and the other claimants at their own cost provide a further independent report into their claim;

(d) if the Minister and the other claimants are creditors, as to the amount of their claim; and

(e) if the Minster and the other claimants are creditors, to relieve her of the duty to admit or reject a proof of debt until the proceedings are finally determined by this Court.

[21] The Minister seeks the following orders as part of the determination of the application:

(a) leave for the orders to be sought in these proceedings, rather than by separate proceedings commenced by statement of claim under Part 18 of the High Court Rules;

(b) directions for service of the proceedings;

(c) a declaration under s 286(3) of the Act that the Ms Nayacakalou has failed to comply with her duties as liquidator;

(d) directions under s 286(3)(b) of the Act requiring Ms Nayacakalou to comply with her duties, and in particular:

(i) to admit the Minister’s claim in the liquidation of the company under s 304(3) of the Act; and

(ii) to give notice calling a meeting of creditors pursuant to s

243(2)(b) of the Act.

(e) An order reserving leave for the Minister to apply for further orders under s 286(8) of the Act;

(f) an order for payment of costs and disbursements to the Minister.

[22] Mr Hayes, appearing on behalf of the liquidator, did not oppose the Minister being given leave to apply in the liquidator’s originating application proceedings, rather than filing a separate statement of claim. Leave is granted accordingly. Regarding service, an order was made by Associate Judge Doogue on 3 October

2015 dispensing with service. Determination of these proceedings are likely to resolve any like claim which could be brought by the Secretary of Education and/or the Board of Trustees of Hillcrest Normal School, although there is nothing to preclude either or both from making separate application.

[23] I now turn to the substantive issues raised by these proceedings. [24] There are three core questions before the Court:

(a) is the Minister a creditor of the company by virtue of the defective building claim alleging negligence which has been filed against the company?;

(b) if the Minister is a creditor of the company, was she entitled to: (i) claim in the liquidation of the company? and/or

(ii) give notice to Ms Nayacakalou as liquidator requiring her to summon a meeting of the creditors of the company?

(c) did Ms Nayacakalou fail to discharge her duties as liquidator by failing or refusing to:

(i) accept the Minister’s claim in liquidation and determine the amount of the claim? and

(ii) summon a meeting of the creditors as requested by the

Minister?

[25] I proceed to consider each of these issues. I will also deal with the other directions sought by Ms Nayacakalou.

Is the Minister a creditor of Osborne Building 2000 Ltd?

[26] Part 16 of the Act deals with liquidations. It contains various definitions relevant in that context. The word “creditor” is defined in s 240 of the Act as follows:

creditor means a person who, in a liquidation, would be entitled to claim in accordance with section 303 that a debt is owing to that person by the company ...

[27] Relevantly, s 303 provides as follows:

Admissible claims

(1) ... a debt or liability, present or future, certain or contingent, whether it is an ascertained debt or a liability for damages, may be admitted as a claim against a company in liquidation.

[28] Mr Hayes, for Ms Nayacakalou, submitted that a tort claim such as that made by the Minister does not create a legally enforceable debt or liability, and that it cannot therefore amount to an admissible claim. Mr Hayes argued that there was no debt or liability in existence as at the date of liquidation, as no Court has yet issued judgment against the company.

[29] Mr Potter for the Minister argued that the legislation and the relevant authorities are clear, and that claims in tort can be admissible claims. He submitted that the Minister is entitled to claim in accordance with s 303 and that she is therefore a creditor.

[30] The definition contained in s 303 is very wide. The language used is broad and inclusive. Virtually every debt or liability capable of being expressed in money terms is eligible for proof in the liquidation of a company.¹ The definition extends to future debts and liabilities, whether they are certain or contingent, and it includes a liability for damages.

[31] The definition clearly extends to damages arising out of contractual obligations incurred before companies are put into liquidation. Liquidators are obliged to accept such claims.²

[32] I can see no reason to draw a distinction between claims in contract and claims in tort. Section 303 does not draw this distinction. Nor have commentators³ or the Courts drawn the distinction. I refer to the following:

(a) In Bunting v Buchanan,⁴ purchasers of a commercial warehouse brought claims against the developer company, which was in liquidation, alleging building defects. The shareholders of the developer company sought to terminate the liquidation and defend the claims. A central consideration in the case was whether the building defect claim gave the purchasers the status of creditors having an

interest in the company’s liquidation. Abbot AJ observed as follows:⁵

I accept that the unit owners have advanced claims for breach of contractual (and tortious) obligations incurred before the liquidation, and that they should be treated as creditors ... for the purposes of the present application.

¹ _{Bunting v Buchanan [2012] NZHC 766 at [44].}

² HIH Casualty and General Insurance (NZ) Ltd v Downey HC Auckland, CIV-2003-404-2838,

17 December 2003 at [18] and [19]; Bunting v Buchanan, above n 1, at [44]; Jordan v

_{O’Sullivan,CIV-2004-485-2611, 13 May 2008 at [279].}

³ Company and Securities Law (looseleaf ed, Brookers) at [CA 303.02]; Paul Heath and Michael

_{Whale Heath and Whale on Insolvency, (online looseleaf ed, LexisNexis) at [20.40(b)].}

⁴ Bunting v Buchanan, above n 1.

(b) In Re Austral Group Investment Management Ltd,⁶ the applicant sought to restore a company to the Register so that it could then apply to have it wound up and claim damages against the directors for negligence and breach of duty under s 321 of the Companies Act

1955. The primary issue before the Court was whether the applicant had standing to bring the proposed application under s 219 of the Companies Act 1955, which provided that such an application could be brought by, inter alia, any creditor or creditors, including contingent or prospective creditors. He accepted that plaintiffs claiming unliquidated damages were prospective creditors, at least when there was no suggestion that the claim was without merit or

could not reasonably succeed.⁷ Relevantly, Holland J stated as

follows:⁸

It is quite clear that if the company were wound up on the application of some other person the plaintiffs would be able to prove in the winding up.

(c) Wellington City Council v Registrar of Companies,⁹ the Council sought to restore a company to the Register so that it could pursue it for contribution. The company had built a leaky apartment complex. It had gone into voluntary liquidation before the defects became apparent. When they did manifest, the apartment owner sued the Council and obtained judgment against it. An issue on the restoration application was whether the Council’s putative contribution claim meant that it was a creditor within the meaning of s 329 of the Act, with standing to make the application. Bell AJ reviewed the

provisions of ss 240, 303 and 307 of the Act, and held as follows:¹⁰

The statement of admissible claims in s 303(1) is a standard provision as to debts and liabilities recognised under insolvency law. It is in wide terms so as to allow a range of debts and liabilities to be recognised. Claims may be in debt but also for other forms of liability. They need not be certain.

⁶ _{Re Austral Group Investment Management Ltd [1993] 2 NZLR 692 (HC).}

⁷ _{At [699].}

⁸ _{At [699].}

⁹ Wellington City Council v Registrar of Companies [2015] NZHC 572, [2015] 3 NZLR 411.

They may need to be estimated, a matter of some difficulty with uncertain variables. Claims in tort may be recognised, even if the company has not admitted liability and also if a court has not so far found the company liable. Because future liabilities may be admitted as claims, future tort claims are admissible. That means that it is not necessary for the cause of action to have accrued at the date of liquidation. Whether an apprehended claim will become an accrued cause of action will be subject to future events, but claims are admissible even if they are subject to contingencies. At this stage, future tort claims are capable of being admitted in a liquidation.

[33] It was argued that for Ms Nayacakalou the Minister’s claim is a contingent

claim, and that only contractual claims qualify as a contingent debt.

[34] I do not accept that submission. A contingent liability to pay damages can be an admissible claim pursuant to s 303(1). It makes no difference that the source of liability is the tort of negligence, rather than a contract or a statute. Frequently, claims in tort and in contract will overlap.¹¹ It would simply make no sense to hold that contingent claims in contract are admissible, but that contingent claims in tort are not.¹²

[35] Further I doubt that it can properly be said that the Minister’s claim is a contingent claim. The schedule to the amended statement of claim filed by the Minister and the other claimants, and annexed to Ms Nayacakalou’s affidavit, sets out a number of alleged defects, each of which prima facia would seem to constitute a breach of the Building Code. Once those defects were identified by building surveyors, the Minister’s claim against the company had accrued because all events giving rise to the alleged liability had then occurred. What remains is a decision as to whether liability arose from those facts. The Minister’s claim is not a claim which is subject to the happening of some future event or some future date. The claim is an asserted claim, as yet unproved. It is a claim for damages and the liability of the

_{company is a future liability until either the claim is accepted or it succeeds at trial.}

¹¹ _{Bunting v Buchanan, above n 1, at [46].}

¹² Wellington City Council v Registrar of Companies, above n 9 at [74]; Re Sutherland (deceased)

[1963] AC 235 (HL); Re T & N Ltd [2005] EWHC 2870, [2006] 1 WLR 1728 (Ch) at [63].

[36] Even if I am wrong and the claim is a contingent claim, it is nevertheless incumbent upon liquidators to undertake a proper evaluation of creditor claims filed in liquidations that are subject to a contingency.¹³ That has not occurred in this case.

[37] Mr Hayes sought to derive assistance from the decision of this Court in Vegar v Aorangi Forests.¹⁴ In that case, Brewer J determined that, in the context of the Insolvency Act 2006, prospective creditors were not creditors with provable debts, as those words are defined in that Act. The argument advanced for Ms Nayacakalou overlooked that the words “provable debts” defined in the Insolvency Act do not contain the words “present or future, certain or contingent”. This was expressly noted by Brewer J.¹⁵ He rejected a submission made by the claimants in that case that the Act should be interpreted to include contingent debts. The Judge noted as follows:¹⁶

Parliament removed the words present or future, certain or contingent from the definition of provable debts. It is not for me to reinstate them.

I do not consider that the Vegar decision has any bearing on the present matter.

[38] I record that s 302 of the Act provides that the rules in force under the rules of bankruptcy also apply to claims by creditors in the liquidation of insolvent companies. However, s 302 is expressly made subject to Part 16 of the Act. It follows that the Insolvency Act is only relevant to issues that are not otherwise expressly dealt with under Part 16. Admissible claims are expressly dealt with under Part 16. There is no need to reason by analogy from the “provable debt” provisions contained in the Insolvency Act, or by reference to cases decided under those provisions.

[39] There was one other potentially relevant case cited by Mr Hayes – Re Islington Metal and Plating Works Ltd.¹⁷ In that case, the Chancery Division in the United Kingdom was applying the Companies Act 1948 (UK). That statute provided

_{that, with respect to debts provable, the same rules applied to the winding up of an}

¹³ _{Bank Tokyo-Mitsubishi UFJ Ltd v Solid Energy NZ Ltd [2013] NZHC 3458 at [163].}

¹⁴ _{Vegar v Aorangi Forests Ltd [2014] NZHC 1109.}

¹⁵ _{At [16].}

¹⁶ _{At [24].}

¹⁷ Re Islington Metal and Plating Works Ltd [1983] 3 All ER 218.

insolvent company as applied under the law of bankruptcy in England. Section 30 of the Bankruptcy Act 1914 (UK) provided that “demands in the nature of unliquidated damages ... shall not be provable in bankruptcy”. Tort claims in Re Islington Metal were therefore excluded as provable debts by the express wording of the governing legislation. The position in New Zealand is clearly different.

[40] In the present case, the Minister’s claim is based on three relatively

uncontroversial legal principles:

(a) building professionals are under a duty to use reasonable care to prevent damage to persons whom they should reasonably expect could be affected by their work; ¹⁸

(b) the content of a builder’s duty of care is to construct a building that

complies with the Building Code;¹⁹

(c) a cause of action in negligence for defects in a building accrues when a reasonably prudent owner would be put on notice that matters require further and proper investigation.²⁰

There is no suggestion that the Minister’s claim is devoid of merit, or that it cannot

reasonably succeed.

[41] In my judgment, the Minister’s claim is an admissible claim pursuant to the s

303(1) of the Act, and the Minister is a creditor of the company.

Is the Minister entitled to claim in the liquidation of the company?

[42] For the reasons I have set out, in my judgment the Minister’s claim is an

admissible claim under s 303 of the Act. She falls within the definition of the word

_{“creditor” in the Act. Her claim is not secured, but she is entitled to make a claim}

¹⁸ _{Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 (CA) at 406.}

19. Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 at [47], [162] and [193].

²⁰ Invercargill City Council v Hamlin [1994] 1 NZLR 513 upheld on appeal [1996] UKPC 56; [1996] AC 624, [1996]

1 NZLR 513 (PC).

under s 304(1), and the liquidator must either admit or reject any claim made under s

304(3). If the claim is rejected, the liquidator must give notice in writing of the rejection. The Minister can then challenge any rejection under s 284(1)(b).

[43] It was argued for Ms Nayacakalou that because no liability has yet been established, the Minister cannot be considered to be a creditor, and that the only way the Minister could become a “real creditor” would be when, and if, the legal proceedings against the company succeed following a hearing. On this basis, Ms Nayacakalou sought to be relieved of her duty to admit or reject the Minister’s claim until the proceedings are determined by the Court.

[44] I do not accept this submission. The Act would be unworkable if Ms Nayacakalou’s position were correct. A claim cannot be stalled, and a creditor cannot be prevented by a liquidator from calling for and participating in a creditors’ meeting, simply because the liquidator fails to comply with his or her duties, or prevaricates as to whether or not the creditor’s claim should be admitted. It is Ms Nayacakalou’s responsibility to either admit or reject the claim made by the Minister and the other claimants under s 304(3). To date, she has not done so.

[45] It does not matter that the Minister’s claim is for an unascertained amount. Section 307 of the Act puts in place a mechanism for dealing with claims for damages that are not for an ascertained amount. The section provides as follows:

Claim not of an ascertained amount

(1) If a claim is subject to a contingency, or is for damages, or, if for some other reason, the amount of the claim is not certain, the liquidator may—

(a) make an estimate of the amount of the claim; or

(b) refer the matter to the court for a decision on the amount of the claim.

(2) On the application of the liquidator, or of a claimant who is aggrieved by an estimate made by the liquidator, the court shall determine the amount of the claim as it sees fit.

[46] The section is based on the premise that as yet unproven claims, such as that made by the Minister, are nevertheless claims in liquidations. The section provides a

mechanism which must be followed where quantum is uncertain. A liquidator is not entitled to refuse to determine a claim because of uncertainty as to quantum.²¹

[47] Ms Nayacakalou asks me to assess quantum. She has not yet, however, considered either of the options available under s 307(1). Nor has she made application under s 307(2). Further, there is no information before me on which I can make any proper assessment. Counsel for the Minister did offer to produce the reports the Minister and the other claimants have provided to Ms Nayacakalou on a confidential basis should I require them. I do not consider it appropriate to do so. Ms Nayacakalou should first endeavour to comply with the statutory obligations contained in s 307(1). It is her responsibility to make an estimate of the amount of the claim or to refer the matter to this Court by application made pursuant to s 307(2).

[48] In my judgment, as at the date of liquidation, the Minister had a claim for damages as against the company. That claim was an admissible claim, and the Minister was a creditor of the company. She was entitled to claim in the liquidation, and to have her claim determined by the liquidator under s 304(3). Because the claim was for an unascertained amount, she was also entitled to have the quantum of her claim determined under s 307.

Was the Minister entitled to call a meeting of creditors?

[49] Ms Nayacakalou was appointed by special resolution by the shareholders of the company. As such, and subject to s 245, she was required to call a meeting of creditors within 10 working days of her appointment under s 243(1)(a) of the Act.

[50] Section 245 provides as follows:

Liquidator may dispense with meetings of creditors

(1) A liquidator is not required to call a meeting of creditors under section 243 or section 244, as the case may be, if—

(a) the liquidator considers, having regard to the assets and liabilities of the company, the likely result of the liquidation

²¹ Hardy v Fothergill (1888) 13 App Cas 351, [1886-90] All ER Rep 597; Re Galyer (1931) GLR

539.

of the company, and any other relevant matters, that no such meeting should be held; and

(b) the liquidator gives notice in writing to the creditors stating—

(i) that the liquidator does not consider that a meeting should be held; and

(ii) the reasons for the liquidator’s view; and

(iii) that no such meeting will be called unless a creditor gives notice in writing to the liquidator, within 10 working days after receiving the notice, requiring a meeting to be called; and

(c) no notice requiring the meeting to be called is received by the liquidator within that period.

(2) Notice under subsection (1)(b) must be given to every known creditor together with the report and notice referred to in section

255(2)(c).

[51] As I have noted above, the claimants served notice on Ms Nayacakalou within the relevant timeframe pursuant to s 245(1)(b)(iii), requiring her to summon a meeting of the creditors.

[52] There is no restriction as to the types of creditors who are entitled to give notice in s 245(1)(c). There is no suggestion in the Act, in the regulations or in the authorities, that creditors with a claim against a company for damages cannot give such notice. Indeed, the opposite is the case. Regulations 19 and 20 of the Companies Act 1993 (Liquidation Regulation 1994) determine the rules for voting at creditors meetings. Under Regulation 19, a person is not entitled to vote as a creditor unless:

(a) the liquidator has admitted the claim wholly or in part either for payment or for voting purposes; or

(b) the chairperson of the meeting of creditors allows the persons to vote in accordance with Regulation 20.

Regulation 20 provides that “if a person is uncertain whether a claim may be admitted or rejected, he or she must allow the creditor to vote”. These regulations

make it clear that when there is uncertainty, a person with a potential albeit uncertain claim ought to be allowed to vote.²²

[53] Ms Nayacakalou asks the Court to relieve her of her duty to call a creditors meeting. I can see no basis on which this should be done, and no convincing reason was advanced in submissions. It seems likely that at the creditors meeting the Minister will seek to replace Ms Nayacakalou as liquidator. The Act explicitly provides for creditors to confirm or remove the liquidator at the first meeting – s

243(1)(a). Creditors should be allowed to call for a creditors’ meeting, and determine how and by whom the liquidation should be run.

[54] In my judgment, the Minister was entitled to call a meeting of creditors.

Has Ms Nayacakalou failed to discharge her duties as liquidator by failing to accept

the Minister’s claim and to determine the amount of the claim?

[55] For the reasons I have set out in this judgment, Ms Nayacakalou was, in my view, obliged to accept or reject the Minister’s claim.²³ If she accepted the claim, she either had to admit the claim in its entirety, estimate the amount of the claim or refer the matter to the Court for decision.²⁴

[56] As I have already noted, it is incumbent upon liquidators to undertake a proper evaluation of creditor claims filed in liquidations that are subject to a contingency.²⁵ I agree with Mr Potter’s submissions that a liquidator’s obligations in this regard are a corollary to the statutory bar on continuing proceedings against a company in liquidation – s 248(1)(c). As he put it, upon liquidation the “race to Court” is over. A creditor is entitled to prove in the liquidation and the liquidator is obligated to promptly accept or reject the claim, and if necessary, to determine its

_quantum.

²² And see Trinity Foundation (Service) No 1 Ltd v Dawney [2006] NZCA 310; (2006) 3 NZCCLR 401 at [35] - the operating assumption should be that liquidators will do what they reasonably can to facilitate creditors being able to vote.

²³ _{HIH Casualty and General Insurance (NZ) Limited v Downey, above n 2, at [19].}

²⁴ _{Trinity Foundation (Service) No 1 Ltd v Dawney, above n 22, at [35].}

²⁵ See [36] of this judgment, and Bank Tokyo-Mitsubishi UFJ Ltd v Solid Energy NZ Ltd, above n

13, at [163].

[57] In the present case, the Minister filed a claim. The liquidator has failed to discharge her duties by either accepting or rejecting the claim. She has failed to determine the amount of the claim. This is notwithstanding that the Minister has provided expert reports to the liquidator supporting her claim. As a result of Ms Nayacakalou’s failure to discharge her duties, the Minister has been prevented either from exercising her rights in the liquidation, or from challenging any decision to reject the claim.

[58] Ms Nayacakalou seeks a direction that the Minister should pay the costs of commissioning yet a further report. Reliance is placed on s 233(5) of the Insolvency Act.

[59] As I have noted above, the Insolvency Act only applies to the extent that there is no express provision contained in the Companies Act dealing with the matter in issue.²⁶ Section 304(5) of the Companies Act provides that the costs of making a claim must be met by the creditor making the claim. Here, the Minister has met those costs. She has provided the expert reports she has obtained. It is not incumbent on the Minister to also pay the costs of the liquidator in fulfilling her statutory duties. The Act places positive obligations on liquidators regardless of whether or not the company in liquidation has funds. Liquidators can be required to incur expenditure in order to discharge their duties which the Act imposes on them.²⁷

If Ms Nayacakalou requires yet another report, then that cost will fall on her.

Has Ms Nayacakalou failed to discharge her duties as liquidator by refusing to summon a meeting of creditors as requested by the Minister?

[60] A liquidator cannot dispense with calling a creditors meeting after being served with a valid notice under s 245(1)(b)(iii).²⁸ Here, valid notice has been given by the Minister. A refusal to call a meeting of creditors, notwithstanding being

_{served with a valid notice, is a breach of the liquidator’s duty.}²⁹

²⁶ _{See [38] of this judgment.}

²⁷ _{Commissioner of Inland Revenue v Revo Industries Ltd [2009] NZHC 1267; (2009) 24 NZTC 23,797 at [18].}

²⁸ Whitireia Community Polytechnic v McLennan HC Auckland CIV-2010-404-3378, 10

_{September 2010 at [3].}

²⁹ Stojkov v Kamal [2015] NZHC 2513 at [1] and [11].

Ancillary orders

[61] The Minister seeks to reserve leave to apply for further orders under s 286(8)

of the Act.

[62] I am not persuaded that it is necessary to make any such order. If there are any further difficulties with this liquidation, the Minister can make further application. So can the liquidator. It is not necessary to reserve leave in the context of this application.

Orders

[63] I make the following orders under s 286(3) of the Act:

Ms Nayacakalou as liquidator of the company is to:

(i) accept or reject the Minister’s claim as required by s 304(3) of the Act;

(ii) make an estimate of the amount of the claim or refer the matter to the Court for decision, pursuant to s307 of the Act;

(iii) call a meeting of creditors pursuant to s 243(2) of the Act.

Costs

[64] The Minister seeks costs against Ms Nayacakalou. She submits that Ms Nayacakalou’s decisions not to admit her claim, not to determine its quantum and not to call a meeting of creditors were both unreasonable and wrong, and that they were contrary to law. She also argues that the decisions have caused her prejudice.

[65] I have concluded that Ms Nayacakalou’s actions in failing to deal with the

Minister’s claim, and in refusing to call a creditors’ meeting, were wrong. They

were also unreasonable – given the preponderance of authority and the clear wording of the Act.³⁰

[66] Neither counsel addressed me on the issue of costs. I make the following directions:

(a) the Minister is to file a memoranda in regard to any costs or disbursements she claims within 10 working days of the date of release of this judgment;

(b) any response on behalf of Ms Nayacakalou is to be filed within a further period of 10 working days; and

(c) memoranda as to costs are not to exceed five pages.

I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.

_{Wylie J}

³⁰ And see Registrar of Companies v Body Corporate 307730 [2013] NZCA 659, [2014] 2 NZLR

623 at [25].