Director to pay $7m

Friday 20th February 2004

A former director of Christchurch-based South Pacific Shipping (SPS) has been found liable by the High Court for reckless trading and ordered to pay what is thought to be the highest award of its kind in New Zealand.

The director, Klaus Lower, has been declared personally responsible for $7 million of the company's debts and ordered to make payment to the company's liquidators, Gary Traveller and John Waller, of Pricewaterhouse-
Coopers.

SPS was formed in January 1992 and went into liquidation, hopelessly insolvent, just over six years later in February 1998. For most of the life of SPS, Mr Lower was its dominant shareholder and director. The liquidators maintained that he conducted the company's affairs in a reckless manner and should be held to account.

SPS operated a cargo shipping line, plying the Pacific Islands and primarily the transtasman trade. From 1992-98 it chartered and operated up to 11 German-owned cargo vessels. Mr Lower had ownership interests in eight of these vessels.

They were bareboat-chartered to SPS through Antiguan and Dutch companies in which he was also a significant shareholder.

Justice Young said the potential for Lower to derive "substantial collateral advantages" from his involvement with the vessel ownership and charter arrangements "encouraged him to gamble with the funds of his creditors."

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