Liquidator vows to appeal Waipareira ruling
The Waipareira Trust has shaved $1 million in losses from a disastrous property development venture after a High Court judge ruled paperwork in a liquidation was deficient and its own lawyers' actions were "erroneous".
The dispute centres on a creditors' meeting called after the souring of a property development joint-venture between Waipareira and Brent Ivil's West Harbour Holdings.
West Harbour was placed into liquidation by Ivil in March, and Waipareira countered by calling a creditors' meeting for April 5 to appoint its own liquidators. At the meeting the trust put a motion to replace Ivil's appointed liquidator - Waterstone Insolvency - with another firm. Grove Darlow partner David Morrison, acting for Waipareira, used $4.6m in debt - secured by mortgages over five West Harbour-owned properties - to vote on the motion.
The motion failed to pass, but liquidators Damien Grant and Kirsten Smith claimed under the Companies Act that the casting of votes at a meeting of unsecured creditors had waived Waipareira's mortgage securities.
Waipareira, now represented by Matthew Muir, QC, went to the High Court at Auckland to seek declarations the mortgage securities were intact. According to liquidators' calculations, the loss of mortgage securities would see a shortfall to Waipareira of $3.2m from the $4.6m claimed.
Succeeding in the hearing and retaining the securities would narrow this loss to $2.1m.
Muir argued the forms used were deficient and Morrison was "incorrect in law" to think he was able to cast ballots at the meeting, making the event a legal fiction.
In his ruling, Justice Christopher Allan said forms issued by Waterstone, and filled out by Waipareira, did not satisfy requirements to convert secured into unsecured debt. "In my view there are fundamental deficiencies in the proof of debt form furnished to Waipareira by the liquidators. The result is that there has been no effective election by Waipareira."
Justice Allan characterised Morrison's attempt to vote at the meeting as based on an "erroneous belief"' and said the ballot-casting had no legal effect.
Waterstone principal Grant said he would appeal the ruling.
- © Fairfax NZ News
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