Grant v Arena Alceon NZ Credit Partners, LLC and Quaestor Advisors LLC [2024] NZCA 366
Whether New Zealand statute is in effect for creditors registered extraterritorially- Application for an order that a person who has failed to comply with a written requirement of a liquidator be forced to comply– s 261, 266(1) Companies Act 1993.
The appellant liquidators for ORL and ORDL filed an application seeking the defendant creditors comply with a requirement under 261 of the Companies Act (CA) to produce books, records, and documents relating to the business affairs of ORL and ORDL. The defendants were companies incorporated in the United States.
At the High Court, the application was dismissed on the basis that ss 261 and 266 of the CA did not have extraterritorial effect against a shareholder or creditor of a New Zealand company in liquidation. The judge concluded in the absence of express language indicating extraterritorial effect, the provisions could not be enforced beyond a director of a company. The rationale aligns with the general starting presumption that New Zealand statute does not have extraterritorial effect.
On appeal, the decision was reversed and an application to set aside the respondent’s appearance under protest to jurisdiction was granted. The appellants argued there was no reason to distinguish between directors and other persons in the context of a liquidation where that party (a creditor) could provide and confirm crucial information. Judge Cooke acknowledged the strength of the starting presumption outlined in Poynter v Commerce Commission [2010] NZSC 38 but stated it was not a linear principle and that extraterritoriality may arise as a matter of necessary implication.
Another important factor to consider is the strength of the connection between the overseas individual and the company in liquidation, to address concerns regarding jurisdictional comity. The court relied upon international law and similar commonwealth cases to determine that extraterritorial effect (in the context of a liquidation) depends on the extent of the connection between the recipient of the order and the company within the active jurisdiction.
