Anderson v Jones - [2021] NZHC 843

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-646

[2021] NZHC 843

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Kevin Robert Anderson

BETWEEN

KEVIN ROBERT ANDERSON

Applicant

AND

KIERAN JONES and STEVEN KHOV

Respondent

Hearing: 12 April 2021

Appearances:

J Dean for applicant (Judgment Debtor)

A Simkiss for respondent (Judgment Creditors)

Judgment:

21 April 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1] This is an application by the judgment debtor, Mr Kevin Anderson, for an order setting aside a bankruptcy notice dated 11 November 2020 served on him by the judgment creditors, the liquidators of Reborn Holdings Ltd (in liquidation) (RHL), Messrs Kieran Jones and Steven Khov.

[2] Mr Anderson was, and still is, the sole shareholder and director of RHL. RHL’s business involved acquiring relatively low value assets (essentially older vehicles), repairing or restoring them and selling them on.

[3] The company expended a substantial amount of money purchasing plant and equipment, vehicles for rejuvenation and engaging a mechanic to carry out the necessary work.

ANDERSON v JONES [2021] NZHC 843 [21 April 2021]

[4] Unfortunately, the company’s business plan unravelled when it became involved in an employment dispute with the mechanic. In the litigation that ensued the mechanic secured a substantial award of damages, on the basis of which he then commenced winding up proceedings. A winding up order was made on 21 May 2019 appointing Messrs Jones and Khov as liquidators.

[5] Following their appointment, the liquidators identified a transaction that they regarded as voidable.

[6] On 23 October 2018, the company and Mr Anderson had entered into an agreement whereby the company sold and Mr Anderson purchased the company’s (relatively recently revalued) assets for $125,000. On settlement no money changed hands, the effect of the transaction being to reduce the credit balance of Mr Anderson’s shareholder current account by that amount. Mr Anderson nominated another company with which he was and is connected by the name of Combined Projects (2016) Ltd (CPL) to take ownership of the assets.

[7] On 18 February 2020 the liquidators served notice of their intention to set the transaction aside pursuant to s 294 of the Companies Act 1993. That notice expired without Mr Anderson having taken any steps. Accordingly, the transaction was set aside.

[8] The liquidators then issued proceedings seeking an order pursuant to s 295(a) of the Companies Act 1993 which provides that when a transaction is set aside under s 294 the Court may make “… an order that a person pay to the company an amount equal to some or all of the money that the company had paid pursuant to the transaction”.

[9]Mr Anderson did not enter an appearance.

[10] Accordingly, on the liquidator’s application, judgment was entered against Mr Anderson on 14 July 2020.

[11] This was a default judgment. It was of course open to Mr Anderson to move to have it set aside. He has not done so.

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 Anderson v Jones

Details

AGLC: Anderson v Jones [2021] NZHC 843
Case: [2021] NZHC 843
Decision Date: 21 April 2021

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Anderson v Jones involved an application by the judgment debtor, Kevin Robert Anderson, to set aside a bankruptcy notice issued by the judgment creditors, Kieran Jones and Steven Khov, the liquidators of Reborn Holdings Ltd. The dispute centered around a transaction where the company sold its assets to Mr. Anderson for $125,000, which the liquidators sought to set aside as voidable. Following the transaction's nullification and subsequent default judgment against Mr. Anderson for the same amount plus costs, the liquidators issued the bankruptcy notice, leading to Mr. Anderson's application to have it set aside.

The primary legal issue before the court was whether the bankruptcy notice should be set aside on the grounds that the proceeding constituted an abuse of process. The court considered whether Mr. Anderson had a valid defense or if there was any incapacity that would justify setting aside the notice. The court also examined whether the liquidators' actions were appropriate and whether there was evidence supporting Mr. Anderson's claim of incapacity at the relevant times.

Associate Judge Johnston found that there was no procedural defect in the liquidators' actions and that Mr. Anderson had not demonstrated any incapacity that would warrant setting aside the bankruptcy notice. Despite Mr. Anderson's health issues, the medical evidence did not support his claim of incapacity at the relevant times, and he had engaged with the liquidators' solicitors to negotiate a settlement. Therefore, the court concluded that the proceeding was not an abuse of process and dismissed the application to set aside the bankruptcy notice. Costs were reserved for potential resolution between the parties' counsel.

Orders