In the Court Of Appeal of New Zealand
CA701/2009
[2010] NZCA 529

BETWEEN	ALF NO 9 PTY LIMITED
Appellant

AND	PHILLIP GEORGE ELLIS, LYNLEY ANN ELLIS AND JOHN LOUIS COKER
First Respondents

AND	ANTHONY CLIVE COLLINS
Second Respondents

AND	ALEX FERGUSON KNOWLES
Third Respondent

AND	TERRY SHAGIN AND FRANCIE SHAGIN
Fourth Respondents

AND	JOHN WILLIAM CUNNINGHAM
Fifth Respondent

AND	WELLINGTON BOOT LIMITED
Sixth Respondent

AND	DOUGLAS RICHARD PAUL AND MELANIE TOLLEMACHE
Seventh Respondents

AND	NICOLA JANE ELLIS (STABLES)
Eighth Respondent

AND	PHILLIP GEORGE ELLIS
Ninth Respondent

AND	NVESTECH LLC
Tenth Respondent

Hearing:	29 July 2010

Court:	O'Regan  P, Harrison and Stevens JJ

Counsel:	M D O'Brien and T C Horder for Appellant
R B Stewart QC and S M Hunter for Respondents

Judgment:	19 November 2010 at 2.15 pm 

JUDGMENT OF THE COURT	

A	The appeal is allowed.

B	The order made in the High Court striking out the appellant’s proceeding against the debenture holders is set aside and the proceeding is reinstated.

C	The respondents must pay the appellant costs for a standard appeal on a Band A basis and usual disbursements.  We certify for two counsel.  

D	Costs in the High Court are to be decided by that Court if the parties are unable to agree.
____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

A funder of litigation
[1]	Entities which carry on the business of funding litigation for profit are relatively new in this country.  ALF No 9 Pty Ltd (ALF), an Australian company, is one such litigation funder.  In 2009 the liquidators of IBS Group Ltd (IBS) assigned to ALF all the company’s rights of action against its former debenture holders and directors (collectively “the debenture holders”) and another company, NVestech LLC (NVestech).  ALF then sued the debenture holders and NVestech in the High Court for losses arising from an earlier sale of IBS’ assets to NVestech at an alleged undervalue. 
[2]	Ronald Young J allowed an application by the debenture holders and NVestech to strike out the proceedings.  He found that the liquidators’ assignment to ALF was void because IBS had sold all its assets to NVestech in 2003 including its rights of action against the debenture holders and NVestech.  Thus, the liquidators did not own any property capable of assignment and ALF had no basis for a claim.  ALF appeals against that decision on a number of grounds.
Background
[3]	The material facts upon which ALF relies can be summarised briefly.  IBS was formed in 1999 to carry on the steel framing business developed by Phillip Ellis.  There were two principal shareholders: one was the W C Ellis Trust (the Ellis Trust) holding 73.3 per cent of the issued shares, which represented the transfer to IBS of Mr Ellis’s steel framing business; the other was AMP Capital Investments No 4 Ltd (AMP) which held the remaining 26.7 per cent, constituted by a cash investment of $2 million.  ALF says that with the benefit of AMP’s investment IBS had a cashed up value of $7.5 million.
[4]	IBS encountered financial difficulties in 2000 and 2001.  A restructuring and compromise with its creditors followed.  The Ellis Trust and AMP shareholdings were reduced to 69.4 per cent and 13.9 per cent respectively.  The remaining 16.7 per cent was spread among a group of new shareholders.  As part of the restructuring, the Ellis Trust and a number of individual investors made advances to IBS, secured by eight separate debentures.  These instruments were executed before the Personal Property Securities Act 1999 (PPSA) came into effect but have since been registered under that enactment.  The debentures used the terminology commonly used in security documents before the PPSA came into force.  For consistency both with the terms of the documents and the arguments addressed to us, we shall adopt the same terminology in this judgment.
[5]	IBS began negotiations with a US venture capital company, HIG Ventures LLC (HIG), to recapitalise its business.  In February 2003 these two parties agreed in principle to transfer IBS’ assets to a new entity, Framemax.  In exchange IBS was to acquire a 70 per cent shareholding in the new company.  HIG was to pay US$3.5 million for the remaining 30 per cent shareholding.  As a result, ALF says, IBS’ asset value was then approximately NZ$14.9 million (calculated by reference to HIG’s proposed 30 per cent shareholding).  
[6]	However, in March 2003 the Ellis Trust exercised its rights as first debenture holder.  The trust took possession of IBS’ steel framing business relying on alleged defaults under the security.  (It is unnecessary for us to traverse the details of ALF’s assertion that IBS was not in default.)  Shortly afterwards, the trust agreed to sell IBS’ assets to NVestech for NZ$3.4 million.  Some of the IBS debenture holders held beneficial interests in NVestech.
[7]	On 7 April 2003 NVestech sold IBS’ assets to Framemax.  In exchange, NVestech acquired a 70 per cent shareholding in Framemax.  HIG paid US$3.5 million for the remaining 30 per cent shareholding.  In October 2003 there were three sales of NVestech shares to the Accident Compensation Corporation. These transactions suggest a value of NVestech at the time of some NZ$13 million, a sum which ALF says is very similar to the value of IBS’ (former) assets calculated on the basis of the February 2003 agreement in principle between IBS and HIG.  
[8]	The sale of IBS to NVestech required AMP’s consent as a shareholder.  AMP’s consent was not forthcoming within the stipulated time.  The sale proceeded in its absence.
ALF’s claims
[9]	On 14 December 2007 IBS was placed into liquidation on AMP’s application.  On 3 March 2009 the liquidators assigned absolutely to ALF all of IBS’ claims against the debenture holders in NVestech.  On 6 March 2009, just within the limitation period, ALF issued its proceeding in the High Court.  Its statement of claim runs to 40 pages.
[10]	ALF alleges that the Ellis Trust, acting as agent for all the IBS debenture holders, sold the company’s assets to NVestech at the significantly under-valued price of $3.4 million; that the assets were then in fact worth approximately NZ$11.5 million more; and that the price was artificially low as part of the debenture holders’ deliberate plan to effectively complete the original transaction agreed to in principle with HIG without obtaining AMP’s consent and then redistribute IBS’ assets among themselves through their interests in NVestech or Framemax.  ALF claims unquantified damages plus interest and costs.
[11]	ALF’s numerous causes of action against the debenture holders include allegations of breaches of duties of good faith and to obtain the best price; and fiduciary obligations.  NVestech is sued for breach of a constructive trust and giving dishonest assistance to the transaction.  Miscellaneous allegations of conspiracy, failures to pay the purchase price and account for the surplus also feature.  If the case goes to trial, ALF will have to refine and focus both its factual allegations and legal causes of action.
[12]	Three aspects of ALF’s claim require emphasis at this stage.
[13]	First, the IBS liquidators applied to the High Court for an order under s 284(1) of the Companies Act 1993 approving an earlier litigation funding agreement with ALF dated 24 September 2008.  Associate Judge Sargisson dismissed the application but without prejudice to the liquidator’s right to apply further.  That decision was not appealed.  Instead, ALF and the liquidators entered into the deed of assignment which is under challenge in this case.  The debenture holders say its terms are essentially the same as the litigation funding agreement.  
[14]	Secondly, the IBS shareholders, other than AMP, do not wish to pursue this litigation.  The Ellis Trust was IBS’ only creditor at the time of liquidation (for $49,130) and has not made a formal claim.  However, the effect of ALF’s claim is to seek judgment for the full amount of the alleged shortfall on the sale of IBS’ assets, even though AMP is the only interested party and its interest is limited to 14 per cent of any recovery.  Ronald Young J held that it would be an abuse of process for ALF to continue its claim for anything more than 14 per cent of the total alleged shortfall.  Mr O’Brien advised us that ALF would amend its claim accordingly if successful on this appeal, subject to the other shareholders disclaiming any interest in the proceeds of the claim.
[15]	Thirdly, the parties agree on the principles to be applied on an application to strike out proceedings.  The facts as pleaded are assumed to be true.  The jurisdiction to strike out is limited to obvious cases.  The Court must be satisfied that none of the pleaded claims could possibly succeed.
[16]	Counsel filed an agreed list of five issues.  However, we are satisfied that only two require determination.  First, who owns IBS’ rights of action against the debenture holders and NVestech?  Second, if ALF owns the rights, is the litigation funding agreement void?
Issues
Issue (1):  Ownership of IBS’ rights of action
[17]	The principal question is whether IBS owned the rights of action against the debenture holders and NVestech which the liquidators assigned to ALF. It will be answered by an analysis of two primary instruments – the Ellis Trust debenture and the agreement of sale and purchase. 
Ellis Trust debenture
[18]	The Ellis Trust debenture, executed on 3 July 2000, was in standard form.  It was a “running and continuing security for the payment” of the secured monies and due performance of IBS’ obligations (cl 4).  The company charged “all its undertaking and all its property and assets whatsoever and wheresover both present and future” (cl 5(a)).  “Property” was defined as “mean[ing] and includ[ing] any real or personal property and any [chose] in action” (cl 1(f)).  
[19]	In the event of a default, the Ellis Trust was empowered to “Enter upon or take possession of the property and assets hereby charged…” (cl 16(a)).  Alternatively, it could (cl 16(b)): 
Either with or without taking possession sell ... such property and assets ... for such consideration as the Debenture Holder shall think fit and upon any such sale the Debenture Holder may sell any part of such property and assets ... for a lump sum. 
[20]	In the event that the Ellis Trust exercised its powers, IBS irrevocably appointed the Ellis Trust (cl 17):
... to be its attorney and in its name and on its behalf to enter into execute sign and do all such assurances deeds instruments acts and things whatsoever which shall be necessary or expedient for all or any of the purposes aforesaid.  
[21]	The proceeds of realisation (cl 20) were to be distributed according to security ranking.  After payment of receivers and other costs, the funds were to be applied in priority to the Ellis Trust, any other debenture holder in ranking order, and the surplus to IBS.  
[22]	By letter dated 17 March 2003 the Ellis Trust advised IBS that it was “… taking possession of the property and assets charged” under the debenture, relying on various events of default.
Agreement for sale and purchase
[23]	On 26 March 2003 the Ellis Trust, IBS and NVestech entered into the impugned agreement for sale and purchase.  The contract recited that the Ellis Trust, “acting on behalf of all IBS debenture holders”, took possession of IBS’ property and assets on 17 March; that IBS empowered the Ellis Trust to sell its assets and to act as its attorney; and that the Ellis Trust was entering into the sale of IBS’ assets on the company’s behalf.  
[24]	The Ellis Trust agreed to sell to NVestech “certain assets as described in Schedule A” for $3.4 million.  IBS agreed to “... transfer ownership of all assets contained in Schedule A ... by completing any assignments, transfers or other documentation”.  The Ellis Trust and IBS warranted that the “assets sold as per Schedule A are unencumbered” except for a specified asset which was charged to a named financier.  All listed assets were acknowledged to be in an “as is where is” condition.  
[25]	The property sold by IBS was itemised in Schedule A.  The company’s known or existing assets were particular patents and trademarks (items 1, 2 and 3); some machinery and other physical assets (items 4 and 5); general know-how, trade secrets and other intellectual property relating to the “operation of the IBS assets” (item 6); design and engineering software, parts of which were nominated (item 7); two internet domain names (item 8) and “all customer contract rights and receivables related thereto” (item 9).  
[26]	The critical clause was the remaining composite item (item 10) as follows:
All other property and assets whatsoever and wheresoever both present and future, including but not limited to: freehold and leasehold land interests in land held under licence, plant, equipment, machinery, fixtures, fittings, vehicles, vessels, aircraft, shares in the capital of any company or corporation, patents, designs, trademarks, tradenames, licences, book debts, uncalled capital, unpaid capital, goodwill, bank accounts and cash in hand.
(Emphasis added).
High Court
[27]	In the High Court, the debenture holders argued that the effect of item 10 was absolute.  Their counsel, Mr Stewart QC, relied upon IBS’ agreement to sell “all [its] property and assets whatsoever and wheresoever both present and future”; it was, he said, “an outright disposition”.  As a result, he submitted, the liquidators had no assets to sell or causes of action to assign to ALF nearly six years later and the assignment was thus void.  
[28]	ALF’s contrary argument was summarised by Ronald Young J as follows:
The plaintiff’s response to these claims is, firstly, the causes of action in these proceedings were not included in the sale of IBS’ assets to NVestech.  The plaintiff says that the Agreement for Sale and Purchase does not identify that any “causes of action” as sold as part of the transaction.  The first part of Schedule A of the Agreement for Sale and Purchase specifies the intellectual property and machinery directly associated with the steel fabricating business run by IBS.  Thus they say the words in cl 10 are governed by the first part of Schedule A.  The plaintiff says it is therefore incorrect to infer cl 10 meant the parties intended to sell the causes of action the subject of these proceedings.
[29]	The Judge found against ALF for these reasons, succinctly expressed:
I consider that there is no reason in this case not to give the words in cl 10 their ordinary meaning.  The ordinary meaning of the words illustrates the objective intention of the parties that the agreement intended to sell all of IBS’ property.  Clause 10 provides for the sale of “All other property and assets whatsoever …”.
The fact that the first part of Schedule A contains specific reference to particular patents, trademarks and machinery was designed to identify particular assets of IBS that were being sold.  However, there was nothing to suggest the detail in the first part of the Schedule was intended to somehow limit cl 10.  Clause 10 made it clear that all of IBS’ assets of whatever type were being sold.  The use of the word “other” in this first line of cl 10 makes it clear it is referring to property and assets in addition to those in the first part of the Schedule.
Appeal
[30]	In support of ALF’s appeal, Mr O’Brien sought assistance from analogous principles in equity and company law, citing many authorities in support.  However, as we have noted, the question of whether IBS retained ownership of its rights of action against the debenture holders following the March 2003 sale will be answered by a careful analysis of the two primary instruments.  It must be borne in mind that ALF has only to establish that its claim is legally arguable to defeat the strike out application.  In this respect, we record that the present challenge to ALF’s numerous causes of action is limited to asserting that the company has no standing to claim.
[31]	ALF’s alternative grounds for upholding the assignment, which Ronald Young J dismissed, were largely repeated in argument on appeal in this Court.  In summary they were that: first, IBS’ future property, namely its causes of action, was insufficiently described in the agreement; secondly, the sale was invalid because notice was not given to IBS; thirdly, IBS retained the right to pursue all its causes of action on the principle that equity will not allow a party to take advantage of its own wrong; and, fourthly, the debenture holders were not at the date of sale entitled to enforce the security and sell IBS’ assets.  It will be unnecessary for us to consider these alternative grounds, although the third will feature in our construction of the primary instruments.
[32]	Mr Stewart supports Ronald Young J’s conclusions.  He says that item 10 was of absolute effect.  The property transferred included all IBS’ rights of action against the debenture holders and NVestech.  He says there is no warrant for reading down an otherwise all-encompassing description.
Analysis
[33]	When read literally and divorced from context, the plain words of item 10 support Mr Stewart’s argument and Ronald Young J’s conclusion.  IBS’ rights of action against the debenture holders and NVestech were part of its property at the date of sale and appear to fall within the ordinary meaning of the phrase “all other property and assets whatsoever and wheresoever”.  However, that is not the end of the inquiry.  
[34]	The governing principle of construction is that all provisions of a commercial contract must be read in context or within the factual matrix.  That compendious phrase includes not only the transaction’s history, nature and purpose, but also its legal framework and setting because the parties are unlikely to have intended to agree to something unlawful or legally ineffective.  The modern approach, restated by Tipping J in the Vector Gas case, is as follows: 
The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear ... As a matter of policy, our law has always required interpretation issues to be addressed upon an objective basis.  The necessary inquiry therefore concerns what a reasonable and properly informed third party would consider the parties intended the words of the contract to mean.  The court embodies that person.  To be properly informed the court must be aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties’ minds.
...
Nor does the objective approach require there to be an embargo on going outside the terms of the written instrument when the words in issue appear to have a plain and unambiguous meaning.  This is because a meaning that may appear to the court to be plain and unambiguous, devoid of external context, may not ultimately, in context, be what a reasonable person aware of all the relevant circumstances would consider the parties intended their words to mean.  An example of that situation is when plain words, read contextually, lead to a result which does not make sense, whether commercially or otherwise: a meaning that flouts business commonsense must yield to one that accords with business commonsense. 
[35]	What, then, was the factual matrix or context here?  Both sides of the transaction must be considered.  The Ellis Trust arranged the sale and executed the contract acting in its capacity as mortgagee in possession.  It controlled the disposition, with IBS participating for the limited purpose of giving formal effect to what was agreed between the Ellis Trust and NVestech such as by signing instruments of transfer.
[36]	IBS was a steel framing company.  Its specific assets and business operations being transferred were listed in items 1 to 9 of Schedule A.  IBS owned some particular intellectual property (which is difficult to value objectively), seven machines and some decoilers, rivet stands and rivet guns, along with miscellaneous contract receivables.  It was hardly a multi-functional or multi-operational entity.  
[37]	Item 10 was a reproduction of material parts of the charging provision in the Ellis Trust debenture, which was itself, as noted, in standard form.  Its content implies that its drafters made no attempt to adapt or tailor its provisions to what IBS was actually selling.  For example, it is not suggested that the company then owned, or was likely to acquire, vessels or aircraft.  Nevertheless, both classes of assets were identified.
[38]	As Mr O’Brien submits, item 10 takes colour or meaning from items 1 to 9.  IBS’ specific legal rights being sold were limited to “customer quotes, contract rights and receivables relating thereto”; all were of a nature relating or incidental to the company’s ongoing business or arising in its ordinary course. IBS assigned all its future property within this category – constituted by its choses of action and recoverable damages.  While this category was not exclusive, the omission of IBS’ future property relating to the transaction itself is telling. 
[39]	This omission is, we think, consistent also both with our summary of what was actually being sold and with the legal relationship between the Ellis Trust and IBS.  The Ellis Trust was subject to statutory obligations when selling in its capacity as mortgagee in possession: principally, to exercise its powers under the debenture (“to sell for such value as it sees fit”) in good faith and according to reasonable standards of commercial practice; and to get the best price reasonably obtainable at the time of sale.  Its duties were owed, in priority, to subsequent charge holders, creditors and the company.  In the event of a breach, the debenture holder would be liable in damages to the other interested parties.   The company or a subsequent charge holder is entitled to sue for the benefit of all.  The Ellis Trust for $49,130 and the shareholders were the only parties potentially interested in a claim against a charge holder arising out of the sale. 
[40]	In this respect, a primary plank of Mr Stewart’s written synopsis in support of Ronald Young J’s decision was that, even if IBS did not sell to NVestech the right to sue the Ellis Trust, that chose in action remained charged to the company’s secured creditors and could not be sold to ALF without their consent.  Mr Stewart properly abandoned that proposition before us.  His acknowledgement of the separation of legal and equitable interests in secured property is supported by authority.  He accepts that the charge holder’s interest was at best of an equitable nature only.  
[41]	As Mr Stewart accepts also, equity will not allow a party to profit from its own wrongdoing. The Ellis Trust could not rely upon its security to interfere with IBS’ right to sue for its wrong in selling the company’s property at an undervalue.  Otherwise the purpose of the right would be defeated because the debenture holder could always deal with it self-defensively and avoid the consequences of its breach.  A receiver appointed by a charge holder is in no better position.  
[42]	Thus, the Ellis Trust could not have obtained even an equitable charge over IBS’ right to sue it.  As that right was excluded from the scope of the secured chose in action, the Ellis Trust when acting as mortgagee in possession had no power to sell it.   IBS’ participation cannot disguise the contract’s essential character, as it expressly recited, of a sale by the secured creditor.  The instrument should not be construed so as to enable the charge holder to assign to NVestech an asset which it did not own.  The parties would not have reasonably intended to agree to something that was lawfully ineffective. 
[43]	NVestech’s position requires separate attention.  IBS’ rights against the debenture holders must first be considered.  Plainly, a purchaser has no interest in proving that a mortgagee in possession sold the mortgagor’s assets to it at an undervalue.  If anything, NVestech’s commercial interests would be served by achieving that very result; that is, purchasing the assets for the lowest possible price.   The greater the price is below the best price reasonably obtainable by the secured creditor, the better for the buyer.  
[44]	Mr Stewart was unable to identify a situation where NVestech may possibly exercise IBS’ right to sue the selling debenture holder.  And we are satisfied that it would be unlikely ever to arise: if NVestech as owner of the right did claim that the assets were sold at an under value, it would be unable to recover any compensation.  Assuming NVestech proved a breach of duty by the Ellis Trust, its acquisition of IBS’ assets at an objectively assessed under value would necessarily be to its corresponding benefit to the extent of the breach.  The amount would be equivalent to and offset the shortfall.  If proceedings were issued against the Ellis Trust, Nvestech would face a claim for indemnity for that amount or a denial of loss.  Financial circularity would likely result.  
[45]	Similar absurdities would arise if Mr Stewart’s construction were correct by reference to IBS’ separate right to sue NVestech for misrepresentation or breach of a contractual obligation.  Mr O’Brien gave the example of NVestech’s alleged failure to pay $260,000 of the purchase price.  These rights arise from the contract itself.  The parties cannot have intended to transfer to the purchaser the vendor’s right to sue that party for loss deriving from the sale; if the contrary view were correct, NVestech would own a cause of action against itself for a loss suffered by IBS. 
[46]	In our judgment, the reference to future property in item 10 cannot be objectively construed to include causes of action against the parties to the contract itself. Otherwise, the contract would not make business sense:  a reasonable person, aware of all the circumstances, would not consider that the parties intended their words to bear a meaning that was antithetical to their respective commercial interests or contrary to business commonsense.  
[47]	Thus the plain words of the contract when read in context did not constitute a sale to NVestech of IBS’ rights to sue the debenture holders or NVestech for losses suffered on the transaction.  Instead, those rights remained vested in IBS’ ownership throughout until 2009.  It follows that we respectfully disagree with Ronald Young J on this threshold question.  But in fairness to the Judge, we have the impression that the argument before him did not focus clearly on the point which has influenced us.
Issue (2):  IBS’ deed of assignment to ALF
[48]	The debenture holders alternatively contend that the litigation funding agreement is void because it impermissibly places the liquidators under ALF’s control.  Ronald Young J was not satisfied that this issue was suitable for determination on a summary basis.  In his judgment, the terms of the deed could not properly be construed without consideration of the relevant factual matrix.  
[49]	Mr Hunter argued this ground for the debenture holders.  He accepts that a liquidator may sell a claim vested in a company pursuant to his or her statutory power.  However, he draws a distinction between company claims – that is, claims existing at the time of liquidation which might have been pursued by IBS itself – and liquidator claims – that is, claims which may only be brought by the liquidator.  Whereas the former may be assigned, the latter may not be, because they vest personally in the liquidator and are not company property.  He accepts that this rule has been modified in New Zealand, to the extent of permitting liquidators’ claims to be assigned – but only with the Court’s prior approval.
[50]	Mr O’Brien’s submissions in response are detailed but it is unnecessary to traverse them.  In our judgment, Mr Hunter’s argument does not survive an analysis of the relevant provisions of the deed, read against the statutory framework.
[51]	When reduced to its essence, Mr Hunter’s argument comes down to two short points.  First, Mr Hunter says, while a liquidator may assign the fruits of the cause of action in return for funding, he or she may not relinquish control of the proceeding to the funder.  Also, even where the cause of action itself is assigned rather than just the fruits, the liquidator may not relinquish control to a company if he or she is to assist in the litigation and share in its results.  Mr Hunter says that funding and co-operation agreements which cede control, like this one, are void, whether the liquidator remains the plaintiff or assigns the claims to a third party.  Mr Hunter accepts the liquidators have retained a degree of control over the proceeding by virtue of their power to approve any proposed settlement (cl 10.1) and ability to require the claims to be re-assigned if ALF does not pursue them (cl 10.3) but says it is insufficient to satisfy the legal requirements. 
[52]	The operative provision of the deed of assignment, cl 3.1, is as follows:
On execution of this Deed and without any further act by the parties being required, IBS absolutely and unconditionally assigns to ALF all (and not part only) of its respective right, title and interest to and in the Causes of Action and the present and future benefit of the outcome or proceeds of the Causes of Action.
[53]	This clause unequivocally assigns IBS’ rights both in the causes of action and any proceeds.  Mr Hunter appears to accept that the assignment was of a company claim; that is, of rights of action which existed at the time of liquidation and which might have been pursued by IBS itself.  He also appears to accept that the liquidators were entitled to assign the “proceeds” of the causes of action – the fruits of litigation – to a third party; that is, the assignment is absolute.
[54]	We do not accept Mr Hunter’s proposition that a liquidator may not relinquish control of litigation to a third party.  The primary prohibition is, as Mr Hunter accepts, on assignment of the liquidator’s powers.  Apart from one limited respect, which forms the basis of Mr Hunter’s next argument, he does not suggest that IBS’ liquidators did assign their powers to ALF.  The liberty given by Parliament to a liquidator to assign rights of action is confirmed by the recent enactment of s 260A of the Companies Act.  A liquidator, subject to prior approval, is now entitled “to assign any right to sue that is conferred on the liquidator by this Act”.  As we have noted, the claims assigned by the IBS liquidators were company claims, not claims conferred on the liquidator by statute.  
[55]	In our judgment, the law does not require the liquidator to maintain a degree of control over litigation where he or she has assigned the company’s claims to a third party.  Ownership of the cause of action includes all rights of control relating to it.  Both Nautilus Developments and Consolidated Technologies were decided before s 260A was enacted.  Once it is accepted that the liquidator is entitled to assign a company claim absolutely, there is no reason in principle to require him or her to exercise any degree of control over the litigation, except to the extent of complying with statutory obligations.  The position would be otherwise of course if, as in Nautilus, the liquidator was pursuing a claim in his or her name and in accordance with a statutory power.  
[56]	Second, Mr Hunter submits that the deed of assignment is void because it purports to transfer ownership of the liquidator’s powers.  He relies particularly on the liquidator’s promises in cl 5.1 to:
5.1.1	deliver to or at the direction of ALF from time to time all documents, files and records in its possession, custody or control;
5.1.2	co-operate with ALF and assist ALF to obtain documents files and records and information and evidence from:
	5.1.2.1	existing and former officers of IBS and its related corporations;
	5.1.2.2	existing and former legal, accounting or financial underwriting, consulting and expert advisers to IBS and its related corporations;
	5.1.2.3	any other person in connection with the pursuit of the Causes of Action;
Provided that nothing in this clause 5.1 shall require the Liquidators to do any act or thing that they reasonably consider would be contrary to law or constitute a breach of their duties as liquidators of IBS. 
[57]	Mr Hunter says the liquidators’ promises of delivery of documents and co-operation with ALF mirror their statutory powers.  That may be correct but in our view it is irrelevant.  The liquidator’s contractual promises are to use their powers to assist and cooperate with ALF, and are plainly incidental upon and related to the assignment and necessary for its effective performance.  The promises do not operate to cede the liquidators’ statutory powers themselves.
[58]	It follows that we dismiss this ground of challenge to the assignment.
Result
[59]	ALF’s appeal is allowed.  
[60]	The order made in the High Court striking out its proceeding against the debenture holders is set aside and the proceeding is reinstated.
[61]	ALF is entitled to costs for two counsel in this Court on a Band A basis together with usual disbursements.  Costs in the High Court are to be determined by that Court if the parties are unable to agree.  

Solicitors: 
Bell Gully, Wellington for Appellant
Gilbert Walker, Wellington for Respondents