Liquidators win first round in Sentry Hill fruit winery court hearing
The owner of an insolvent Taranaki fruit winery has lost his attempt to be awarded security of costs before going to trial.
In the High Court at Wellington an application by former Sentry Hill Winery owner Stephen Parkes for liquidators to deposit $49,000 or more into a trust account as security until the outcome of the trial proceedings has been turned down.
The award winning winery was put into liquidation in April 2016 owing a total of $610,571.11 to unsecured creditors including $281,858 to NZ Customs for unpaid excise duties, and $243,300 to ANZ Bank.
Security for costs is a payment of money to ensure that if a person is unsuccessful in proceedings, they will be able to pay costs.
The money is kept in a trust account until the final outcome of the proceeding.
If security for costs are ordered by the judge, a stay on proceedings may also be ordered until the security is paid into court.
Associate Judge Warwick Smith said the evidence submitted at the hearing did not justify making an order for security and Parkes had failed to make out a case for security of costs.
Sentry Hill Winery is one of two plaintiffs seeking a claim against Parkes.
The company is owned in a trust by the Parkes family and, as first plantiffs has claimed $35,383.43, which is the amount overdrawn from his account when the company was liquidated.
It had been insolvent since January 2012 on a cash flow basis and since March 2012 on the balance sheet.
The second plaintiffs, Andrew Hawkes and Vivian Fatupaito of KPMG, who are also the liquidators, have claimed $610,571.11 plus interest and costs.
The plaintiffs successfully argued any order by the court for security of costs would likely prevent them from pursuing claims against Parkes.
Parkes applied for security of costs because the liquidated company, Sentry Hill Winery, of which he was the sole shareholder, would be unable to pay his costs if the company was unsuccessful in the trial proceeding.
He also argued the plaintiffs claims would likely be uneconomic and not benefit the company's creditors as there was only $1500 left in the company accounts in September 2016.
Parkes said he made four payments of excise duty to NZ Customs totalling $21,000 between September 2012 and April 2016 when he was legally required to submit six monthly payments in January and July each year.
He believed the company's financial position was improving and the accounts were forecasting a profit.
Parkes claimed he did everything in his power to trade the company out of insolvency.
In an affidavit Parkes said he had worked "thousands of hours" unpaid at the winery, and had also put $235,000 of his own money into the company over five years to help improve cash flow and reduce high interest debt.
In evidence Parkes said the company financial position would improve and the company would return to solvency.
He continued to work unpaid at the company to help the liquidators and had no personal funds to meet any judgement if the plaintiffs were successful, he claimed.
In his judgement Judge Smith said Parkes had failed to make out a case for security of costs.
A trial date has not yet been set down.