Stanley Construction (Auckland) Limited (in liquidation) (Stanley), of which Damien Grant is the liquidator, successfully opposed the application of Dermott McVeigh to be the receiver of the retention fund in McVeigh v Decmil & Ors  NZHC 2929 [1 November 2021].
The case centered around the liquidation of Decmil Construction NZ Limited (in liquidation) (the Company). It went into liquidation owing circa $3.8 m in retentions under the Construction Contracts Act and its parent company had (just before liquidation) injected $3.3 m into the Company to help satisfy those claims.
The Company’s liquidator, Mr McVeigh, applied to be the receiver of that $3.3 m. This was on the basis that he was the Company’s liquidator, and that as he had already completed work adjudicating some of the retention creditor’s claims, that he was best suited to efficiently carry out the completion of the job.
This was opposed by VAE NZ Limited and Stanley, who said that Mr McVeigh was barred from being appointed receiver of the fund, as he was conflicted, he had demonstrated poor performance in the liquidation leading up to the Court hearing, he had taken funds from the pot knowing that they were intended to be set aside to satisfy the retention claims, and that he was attempting to present to the Court a fait accompli by saying that he was the best person to be the receiver of the fund since he had completed work on it.
The High Court stated that its greatest concern with the appointment of Mr McVeigh as receiver arises from his depletion of the fund prior to the consent order (establishing the status of the fund as being for the retention claims). There was circumstantial evidence that Mr McVeigh would be beholden to DAP (the Company’s parent company) due to the separate agreement that was peripherally raised by Mr McVeigh during the hearing but not addressed in evidence. This circumstantial evidence was enough to show that he could not be appointed receiver of the fund, as he could not be viewed as independent against the background of his conduct between his appointment as liquidator and the making of the consent order.
The Court also held that there were supporting concerns that weighed against Mr McVeigh being appointed. He failed to seek timely directions from the Court as to the status of the fund, his potential conflicts of interest and disputes regarding his fees all were enough to disqualify
His failure to seek timely directions from the Court as to the true status of the fund, his potential conflicts of interest and disputes regarding his fees were all factors in Irvine v ASUL that disqualified that applicant from being appointed receiver. One of the concluding remarks from the Court was that “[McVeigh] has paid out fees to himself from a fund when the status of that fund was reasonably open to dispute and on one view was a trust fund for a specified category of Decmil’s creditors”.
 McVeigh v Decmil & Ors  NZHC 2929, at .