Case study: Can the Court recall a liquidation order?

In APRA New Zealand Ltd v 123 Casino Ltd [1], 123 Casino Ltd (the company) was placed into liquidation, the basis of the liquidation application being the company’s failure to respond to a statutory demand. The sole director and shareholder of the company then made an application to Court requesting that the Court recall the liquidation order.

Under its inherent jurisdiction and rule 11.9 of the High Court Rules 2016 (the HCR), the Court has the jurisdiction to recall a liquidation order. Rule 11.9 provides that a judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed. No formal application is required under rule 11.9, and the application can be made by memorandum.

The applicant seeking the recall relied on the following factors:

• The company had been operating for 24 years.
• The sole director and shareholder of the company did not appreciate the seriousness of the situation and thus failed to respond to the statutory demand and subsequent liquidation application.
• The company had sufficient funds to pay the debt owing on the statutory demand.
• The debt of circa $4k owing on the statutory demand was a modest debt.
• Taking the above into consideration the outcome of liquidation would be disproportionate.
• The liquidation would result in loss of income for seven people.
• The company was able to pay its due debts.

At the time of the application for recall, the company had not yet paid the debt owing on the statutory demand nor had it provided sufficient explanation as to why it failed to respond to the liquidation application. Notwithstanding this, the Court, considering factors relied on by the applicant, determined that this was a case where the liquidation order should be recalled. However, before orders recalling the liquidation could be sealed, the company was to pay the debt owing on the statutory demand. ??

[1] APRA New Zealand Ltd v 123 Casino Ltd [2024] NZHC 3968 [20 December 2024].

Read the full article by Waterstone in-house counsel,? Kelly Cocks