Robert
Jones Holdings alleges liquidators of Northern Crest are more interested in
collecting their liquidation fees than properly carrying out the
liquidation. Liquidators Anthony
McCullagh and Steve Lawrence from PKF Corporate Recovery complain RJH is just
stalling on demands for repayment of rentals totalling $751,930 they claim are
a voidable preference.
A later iteration of failed property
developer Blue Chip, Northern Crest Investments Ltd leased office space from
RJH in Auckland before shifting operations to Sydney. In 2008 Northern Crest rent payments were in
arrears. RJH issued statutory demands
for payment as a precursor to forcing Northern Crest into liquidation, retaking
possession in August 2008 after Northern Crest abandoned its lease. The three years preceding Northern Crest’s subsequent
liquidation in June 2011 saw move and countermove as RJH threatened to force
its former tenant into liquidation for unpaid rent only to hold off while
promises were made of payment by instalments.
Payment came in dribs and drabs, invariably late. In the 18 months prior to Northern Crest’s
liquidation RJH received a total of $751,930.
Payments were sourced from legal entities associated with Northern
Crest. The liquidators demanded
repayment from RJH, alleging these payments were made when Northern Crest was
insolvent. RJH went on the attack,
saying payment was not made by Northern Crest itself but by other companies
covering Northern Crest’s debts. In the
High Court, RJH claims these other companies were under no obligation to meet
Northern Crest’s debts and consequently it was not obliged to refund Northern
Crest. Claims to an offset between the various
Northern Crest companies are nothing but a sham, it claims. A company called Columbus Property Marketing
Pty Ltd paid $489,180 to RJH (being monies due to Northern Crest under a
licensing agreement the liquidators say); MSH No.2 Ltd paid $262,750 to RJH
(repayment of a loan from Northern Crest according to the liquidators). RJH demanded the right to see documents held
by the liquidators to check the validity of these claimed offsets.
In a parallel attack on the liquidators’
claim, RJH says Northern Crest was not insolvent at the time payments of
$751,930 were made. At a preliminary
court hearing, Associate judge Bell was moved to say RJH cannot seriously argue
Northern Crest was solvent given that RJH’s own behaviour in chasing payment
show unmistakeably that Northern Crest could not pay its debts.
As a parting shot, RJH is attacking the
liquidators’ motives alleging demands for repayment of $751,930 is driven by
their desire to recover funds to pay their liquidation fees and that they have
failed to properly investigate validity of the claimed offset payments. As evidence, RJH wanted access to the
transcript of a 2011 meeting between Steve Lawrence as liquidator of Northern
Crest and representatives of another Northern Crest creditor. This meeting was recorded without Mr
Lawrence’s knowledge. It led to
allegations that Mr Lawrence offered to go easy on any investigation into Northern
Crest’s affairs in return for a fee payment of $850,000. Justice Downs ruled the transcript was not
admissable. It was part of privileged
“without prejudice” negotiations. This
privileged status stood; the discussions were not in the advancement of any
dishonest purpose, he said.
Justice Downs approved limited disclosure
to RJH of some correspondence between Northern Crest and its lawyers held by
the liquidators where it related to disputed questions of fact. Whether RJH has to repay $751,930 is yet to
be resolved. Court proceedings were
started in 2013 and should have been concluded by now, Justice Downs said.
Robert
Jones Holdings v. McCullagh – High Court (21.10.16)
16.150