Former Prime Minister Dame Jenny Shipley and other directors of failed national builder Mainzeal Construction have lost an attempt to reduce financial penalties.
The High Court at Auckland rejected the case brought by Jennifer Mary Shipley, Richard Ciliang Yan, Peter Gomm, Clive William Charles Tilby and others against a $36 million penalty imposed on them.
In late February, Justice Francis Cooke ruled that four directors of the failed construction company should pay $36 million to unsecured creditors. The Mainzeal directors had traded recklessly, Justice Cooke said, particularly by allowing the mostly loss-making company to trade for several years while technically insolvent.
The judge ordered Shipley, Tilby and Gomm were liable for up to $6m each of the $36m total. In the case of a fourth director, Richard Yan, who was also the founder and main shareholder of Mainzeal's parent company, Shanghai-based Richina Pacific, Justice Cooke said he should be liable for the full $36m. The four directors have already filed appeals.
In the latest case, heard in May, the application by the plaintiffs to alter the amount awarded in the original judgment were dismissed.
The loss they caused was the starting point for their liability, the judge said.
In the latest case, the liquidators Andrew Bethell and Brian Mayo-Smith applied to seek higher penalties.
The directors argued the court's assessment of the losses for creditors caused by their breach of duties were "exaggerated because the court used the gross amount owing to the creditors without taking into account expected recoveries from the assets of the companies in liquidation".