Adaptable Solutions Ltd v Toon - [2017] NZHC 753

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2016-404-001468

[2017] NZHC 753

BETWEEN
ADAPTABLE SOLUTIONS LIMITED

Applicant

AND

VICTORIA TOON AS LIQUIDATOR OF KOORB CONSULTING (1999)

LIMITED

respondent

Hearing: 25 October 2016

Appearances:

A Holmes and A Steel for Applicant R Hollyman for the Respondent

Judgment:

20 April 2017

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 20 April 2017 at 10.00 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Hudson Gavin Martin, Auckland Stainton Chellew, Auckland

R J Hollyman, Auckland

ADAPTABLE SOLUTIONS LTD v TOON [2017] NZHC 753 [20 April 2017]

A J B Holmes / A J Steel, Auckland

[1] Koorb Consulting Ltd is in voluntary and solvent liquidation. Adaptable Solutions Ltd claims to be owed a substantial debt by Koorb, and seeks leave under s 284 Companies Act 1993 to apply for an order to reverse (or modify) the decision of Koorb’s liquidator partially rejecting Adaptable’s proof of debt. Ms Toon, the liquidator, opposes the application.

[2] The alleged debt relates to a sale and purchase transaction in 2015 between Adaptable and Koorb.

[3] Upon learning of Koorb’s liquidation, Adaptable filed a proof of debt to the tune of $183,103.94 in respect of claims arising from the sale and purchase agreement. Ms Toon has accepted part of Adaptable’s claim ($9,237.73), but rejected the balance.

[4] For reasons I will turn to presently, I consider that Adaptable has put forward an arguable case that justifies the granting of leave under s 284 to permit Adaptable to commence a proceeding against Ms Toon seeking an order reversing or modifying the decision complained of. There is insufficient evidence before the Court, however, to decide the substance of the dispute in this present application.

Background

[5] Adaptable and Koorb are both software companies. Adaptable developed a business selling, implementing and supporting resold Axapta software, now known as Microsoft Dynamics AX, as well as several add-on modules.

[6] In early 2015, Adaptable began looking for ways to sell or restructure its business. Discussions began with Koorb in May, and after considerable back-and-forth between the companies, a sale and purchase agreement was finalised on 26 June 2015.

[7] This agreement is analysed in more detail later. But in brief, Adaptable sold to Koorb a division of Adaptable’s business called the “AX Business”; and Koorb agreed to make “Earn-out payments” to Adaptable for revenue earned for a 12-month period.

[8] Shortly after the agreement was signed, the parties developed an informal “work around” transitional arrangement for work that Koorb would eventually provide under the agreement, but was not then in a position to provide. Essentially, Adaptable would perform the work for AX customers and invoice Koorb at standard customer rates, and Koorb would then invoice the customer. Adaptable provided three invoices to Koorb under this arrangement.

[9] In late September 2015, Koorb agreed to on-sell the AX Business to a third party, UXC Eclipse. As this was prior to the expiry of Koorb’s…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Adaptable Solutions Ltd v Toon

Details

AGLC: Adaptable Solutions Ltd v Toon [2017] NZHC 753
Case: [2017] NZHC 753
Decision Date: 20 April 2017

CaseChat Overview and Summary

Adaptable Solutions Ltd sought leave to apply to the Court for an order to reverse or modify the decision of the liquidator of Koorb Consulting Ltd to partially reject a proof of debt. The debt arose from a sale and purchase agreement between the two companies. The liquidator accepted a portion of the debt but rejected the balance. The Court was required to determine whether Adaptable had an arguable case justifying leave to seek the Court’s orders. The Court found that while the interpretation of the agreement was ambiguous, Adaptable had an arguable case, particularly in light of extrinsic evidence. The Court also found that the liquidator’s decision-making process, while not ideal, did not prevent Adaptable from having an arguable case. Therefore, the Court granted leave to proceed, and ordered Adaptable to receive costs on a 2B basis plus disbursements.

Orders