Attempting to salvage something out of a problematic Pauanui subdivision, property developer Gregory Needham found all cash recovered was swallowed up by liquidator’s fees and expenses.
Based in Germany, Mr Needham ran short of cash completing a planned 66 hectare subdivision at Pauanui on the Coromandel coast. The first stage, with 42 fully serviced sites, was fully sold. The second stage needed more working capital. Funding in 2012 from financier John Samy saw subdividable land held by Mr Needham’s company Pauanui Mountain Estate transferred to a special-purpose company ultimately controlled by Mr Samy: Pauanui Dream Estate Ltd. Bitter legal argument between the two resulted in a 2016 High Court ruling that Mr Needham had no management control of Pauanui Dream and was only a minority shareholder.
Meanwhile, Mr Needham put his vendor company Pauanui Mountain Estate into liquidation. Seven years later, he was in the High Court criticising the actions of liquidator Kelera Nayacakalou. Cash receipts in the liquidation amounted to some $107,000; the bulk of this arising from a $100,000 out-of-court settlement with Pauanui Dream Estate after Ms Nayacakalou claimed Pauanui Mountain’s land was transferred to Pauanui Dream at less than market value.
Of the $107,000 cash held, Ms Nayacakalou paid out about $57,000 in legal fees and billed $50,000 as her liquidation costs. Mr Needham challenged her fees as not being reasonable.
Conduct of a liquidation can be reviewed by the High Court. Ms Nayacakalou’s performance raised questions: she was seriously ill for many months following surgery for a brain bleed; there were suspicions substantial hours billed at a higher rate in her name were for work done by a colleague. Her time records required some explanation. One time sheet recorded a sixteen hour day drafting legal papers.
While Mr Needham criticised the liquidator’s $100,000 out-of-court settlement as being ‘soft,’ Associate judge Andrew ruled it was speculative as to whether there could have been any better outcome. It is unlikely any adjustment would be made to the fee charged if there were a full review by the court, he said. Time records supported a fee recovery in excess of that taken.
re Pauanui Mountain Estate Ltd – High Court (5.03.21)
21.044