Hamilton Locke New Zealand1 Litigation Partner, Mihai Pascariu, together with Mark O’Brien KC and Zane Kennedy, have represented the liquidators of Mainzeal Property and Construction Ltd (Mainzeal) for the past 8 years in litigation against Mainzeal’s former directors which concluded with the Supreme Court’s decision released today (25 August 2023).
Mainzeal, one of the largest New Zealand construction companies, was placed in receivership and liquidation in February 2013. By the conclusion of the receivership, the receivers had paid the secured creditor, Bank of New Zealand (BNZ) and preferential creditors in full. However, the shortfall owed to unsecured creditors in the liquidation is approximately $NZ110 million.
The Supreme Court has found that the directors breached their duties under sections 135 and 136 of the Companies Act 1993. The Court ordered the directors to contribute in excess of $NZ50 million in compensation to the assets of Mainzeal. The decision should bring closure to the creditors and subcontractors who suffered financial losses and were left approximately $NZ110m out of pocket following the company’s collapse in 2013.
Commenting on the judgement, Hamilton Locke New Zealand Partner Mihai Pascariu said:
“We welcome the Supreme Court’s landmark ruling that clarifies the scope and application of directors’ duties when a company is insolvent or on the brink of insolvency. The decision highlights the obligations and responsibilities of directors to carry out their duties with unwavering diligence and accountability.
Today’s court decision is a resounding victory for the creditors and subcontractors who were affected by the collapse of Mainzeal. The judgment reinforces the crucial role that directors play in upholding and maintaining the financial integrity of a company and it underscores that negligence will not be tolerated. The decision sets a precedent for corporate accountability. It also highlights the importance of litigation funding, without which pursuing a case of this size and duration would not have been possible.
We hope that the Supreme Court’s ruling provides the creditors and subcontractors of Mainzeal with a sense of justice”.
Corporate commercial law firm, Hamilton Locke expanded into New Zealand in November 2022, with the establishment of Hamilton Locke New Zealand. Boutique commercial law firm, Anderson Creagh Lai (ACL) joined the firm with this announcement. Hamilton Locke New Zealand is based in Auckland and brings to New Zealand the benefits of one of the fastest growing law firms in Australia.
1An incorporated New Zealand law firm, licensed to use the Hamilton Locke brand.
