Review sought for remuneration charged in liquidation of 133 companies
New Zealand’s Court of Appeal has refused permission to appeal in a proceeding where the applicant alleged that the second respondent – director of the first respondent, a liquidation company – charged excessive fees as liquidator in the liquidations of 133 companies.
In Jindal v Liquidation Management Limited [2026] NZCA 61, the applicant sought a review of the remuneration the second respondent had charged during those liquidations under s 284 of the Companies Act 1993.
Initially, the applicant asserted no financial interest in the proceedings and claimed to be acting as a watchdog, which raised issues regarding his standing under s 284(1) of the Companies Act.
Later, the applicant alleged that he had become a creditor of two of the 133 companies, having obtained deeds of assignment of debt after an award of security for costs, but before his unsuccessful application for leave to appeal that decision.
In proceedings involving various interlocutory matters, the High Court ordered the applicant to provide security for costs. The Court of Appeal denied the applicant’s application for leave to appeal the High Court order.
Before the High Court, the applicant filed a pending application for leave to commence a representative proceeding on behalf of the creditors and shareholders of the 133 companies on an opt-in basis under r 4.24 of the High Court Rules 2016 (HCR).
The respondents argued that the High Court proceeding abused the process and that the applicant was retaliating for their successful case against him in a distinct matter.
Associate Judge Brittain of the High Court declined the applicant’s applications seeking the joinder of three other parties as plaintiffs to his proceeding, as well as the rescission and return of what he had paid as security for costs. Brittain granted the respondents’ cross-application for further security for costs against the applicant.
The High Court declined leave to appeal. Before the appeal court, the applicant again applied for leave to appeal the High Court decision. He alleged four legal errors to warrant a review:
The Court of Appeal of New Zealand dismissed the application for leave to appeal and ordered the applicant to pay the respondents’ standard application costs on a band A basis, plus the usual disbursements.
The appeal court ruled that the proposed appeal did not rise to the high threshold for granting permission to appeal an interlocutory decision.
The appeal court held that the proposed appeal grounds were not seriously arguable, lacked merit, and raised no matters of general or public importance. The appeal court determined that the judge correctly identified and applied the criteria in r 4.56 of the HCR.
The appeal court explained that the potential standing of the proposed plaintiffs, as well as possibly hundreds of others, to initiate their own proceedings under s 284(1) of the Companies Act did not necessarily mean that the court should have joined the proposed plaintiffs to the applicant’s proceeding or required their presence to adjudicate and settle it.
Regarding distribution prospects, the appeal court noted that the proposed plaintiffs should file their own discrete applications under s 284(1), given the different circumstances pertinent to each application.
Regarding natural justice, the appeal court rejected the applicant’s argument that he did not have an opportunity to be heard on the question of whether to stay the proceeding until the payment of further security and previous costs orders, a relief the respondent allegedly did not seek.
The appeal court acknowledged that the respondents requested an order to stay the proceedings in their written submissions, with the applicant providing a response, and orally requested such an order at the 8 October 2024 hearing, during which the applicant had the opportunity to make additional submissions on the issue.
