Shipley to appeal Mainzeal judgment
Mainzeal’s liquidators say they are disappointed at the court appeals lodged by directors because it means subcontractors and creditors will have to wait longer to receive any of the $36 million awarded to them.
Mainzeal directors Dame Jenny Shipley, Clive Tilby and Peter Gomm are following the lead of director Richard Yan and will file a notice of appeal against the recent High Court $36m judgment against them.
Liquidators Andrew Bethell and Brian Mayo-Smith, of BDO, said the High Court judgment was ‘‘emphatic’’.
‘‘Many creditors, who through no fault of their own, lost millions when Mainzeal was put into liquidation and were put into serious financial difficulty as a result,’’ the liquidators said.
Mainzeal collapse could end Shipley’s career as a director.
The High Court upheld charges of reckless trading and ordered the directors collectively pay the $36m as compensation.
The High Court action was taken by the liquidators of Mainzeal after the collapse of the construction company in 2013 and subsequent liquidation, which revealed unsecured creditors were owed more than $110m.
‘‘The directors do not agree with the High Court judgment and believe they have strong grounds to challenge the decision,’’ the directors said in a statement.
Their move follows that of director Richard Yan, who filed a notice of appeal to the Appeal Court.
Shipley, who was Mainzeal’s chairwoman, Tilby and Gomm, were represented by law firm Chapman Tripp, which will file a notice of appeal on their behalf.
A copy of the notice of appeal is due to be made available by Jack Hodder, QC.
The exact number of job losses from the company’s failure remains unclear because Mainzeal used subcontractors but the numbers ran into hundreds at the time of the collapse.
The eight-week High Court trial relied on evidence from Bethell, although Justice Francis Cooke said it was ‘‘significant’’ that some key witnesses, such as Mainzeal’s chief financial officer Reegan Pearce, were not called.
‘‘In addition, nobody was called from Ernst & Young, Mainzeal’s auditors over most of the important period of time [10 years] in this case.
‘‘Given the significance of their assessment of Mainzeal as a going concern, and other reports provided by that firm, it is also apparent they may well have had relevant evidence to give,’’ Justice Cooke said in his ruling.
Justice Cooke determined that the directors should contribute $36m, about one-third of Mainzeal’s total loss, with Yan taking the greater share for his conflicts of interest.
‘‘I have further determined that Mr Yan should have the principal liability for the full amount, and that each of Dame Jenny, Mr Gomm and Mr Tilby should be liable for a maximum amount of $6m each, jointly with Mr Yan.’’
But the exact split of payments has yet to be determined, and it is unclear how much, if anything, the directors are personally liable for and how much their insurers will pay.