Warren Metals v Grant [2013] NZHC 263 was a successful appeal against a District Court decision that struck out the appellant's cause of action on the basis that the District Court did not have jurisdiction to review the acts of liquidators.

The appellant, Warren Metals Ltd, was a company that dealt with scrap metal.  They traded with a number of companies run by Mr Conway which obtained scrap metal from the public and then on sold it to the appellant.  Mr Conway's companies were placed into liquidation and administration with the respondents appointed as liquidators and administrators.

The appellant alleged that the respondents had acted unlawfully in dealing with two containers of scrap metal and a scrap metal press (which was itself later scrapped by the respondents), the ownership of which was disputed by the appellant.  This claim was initially struck out by the District Court on the grounds that the operation of sections 248 and 284 of the Companies Act 1993 (Act) meant that only the High Court had the jurisdiction to review matters relating to the decisions of liquidators.

On appeal, Asher J found that the subject of the proceeding was a personal claim against the respondents for interfering with a third party's property.  As this was a personal claim and not a review of a liquidator's act, sections 248 and 284 of the Act did not apply as these sections were not designed to protect liquidators from their unlawful actions against the property of third parties.  As a result, Asher J set aside the strike out order and ordered the substantive proceedings back to the District Court to be heard.

This case serves as a useful reminder for insolvency practitioners that they could face a personal claim in the District Court when dealing with property in the course of their appointment over which the ownership is in dispute.

See court decision here.