Hearing:	4–5 November 2020
Court:	Goddard, Duffy and Nation JJ
Counsel:	J D McBride, and A J Steel for Appellant F J Thorp and L J Turner for Respondent
Judgment:	3 June 2021 at 10.00 am

JUDGMENT OF THE COURT

AMr Arnerich’s appeal is allowed in so far as it relates to the award of interest on the sum of $367,768.12. The award of interest in the High Court is set aside, and remitted back to that Court to be determined in accordance with this judgment.
BDHC’s cross-appeal is allowed. The proceedings are remitted back to the High Court to determine the amount of any further claim DHC may have against Vaco under the construction contract, and, in light of that determination, to make such further orders against Mr Arnerich under s 301 of the Companies Act 1993 as may be appropriate.
CMr Arnerich must pay costs to DHC on the appeal and cross-appeal, in each case for a standard appeal on a band A basis, with usual disbursements. We certify for second counsel.

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Table of contents

Para No

Introduction and summary

Background

Establishment of Vaco and Vaco Trust and purchase of Lincoln Road property
Vaco enters into construction contract with DHC
Financing arrangements with ANZ
DHC carries out the construction work — disputes develop
Further payment claims and disputes
DHCs letter to Mr Beagley (6 March 2013) enclosing extension of time related materials and submissions
DHC Final Payment Claim — Payment Claim 17
Vaco sale of Lincoln Road property
Payments made by Vaco following sale of Lincoln Road property
Vaco tax liability paid by other Arnerich entities
Final Payment Schedule No 17
DHC’s follow-up email on 8 August 2013
Further correspondence in relation to DHC’s claims
Liquidation of Vaco
Adjudication proceedings
DHC refers its claims to arbitration

DHC’s proceedings against Mr Arnerich

DHC’s allegations against Mr Arnerich
Mr Arnerich’s defence

High Court judgment

Legal framework for the claim
Ability of the High Court to determine Vaco’s liability to DHC
Findings in relation to Mr Arnerich’s knowledge about DHC’s claims
Breach of s 131 of the Companies Act
Relief under s 301 of the Companies Act

Issues on appeal

Principles governing DHC’s s 301 claim

Liability under s 131 of the Companies Act
The implications of the trading trust structure
Relief under s 301

Should the High Court have determined the amount of DHC’s claim against Vaco?

Did Mr Arnerich breach s 131 of the Companies Act?

Mr Arnerich’s submissions on appeal in relation to s 131
DHC’s submissions in relation to s 131 breach

Discussion

Liability under s 301 of the Companies Act

Potential liability to Vaco under s 131
Liability under s 301
Treatment of GST

Interest

Remittance back to High Court

DHC’s retention claims

Result

REASONS OF THE COURT

(Given by Goddard J)

Introduction and summary

The…

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 Arnerich v DHC Assets Ltd

Details

AGLC: Arnerich v DHC Assets Ltd [2021] NZCA 225
Case: [2021] NZCA 225
Decision Date: 3 June 2021 at 10.00 am

CaseChat Overview and Summary

This appeal concerns the liability of Mr Antony Arnerich, the sole director of Vaco Investments (Lincoln Road) Ltd (Vaco), for breaches of his fiduciary duties under the Companies Act 1993 (Companies Act). DHC Assets Ltd (DHC) is an unpaid creditor of Vaco. Vaco was placed into voluntary liquidation on 1 July 2014. DHC brought proceedings against Mr Arnerich under s 301 of the Companies Act, seeking an order that Mr Arnerich compensate DHC for the amount it was owed by Vaco. The High Court found that Mr Arnerich had breached his fiduciary duties to Vaco by causing it to distribute funds to the beneficiaries of the Vaco Trust, including himself, before ensuring that Vaco retained sufficient funds to meet contingent claims by DHC. It made an order under s 301 of the Companies Act that Mr Arnerich pay DHC the amount of $367,768.12 plus interest, as determined in an adjudication. Mr Arnerich appealed the decision. DHC cross-appealed, seeking orders that the High Court determine the amount of Vaco's liability to it, and that Mr Arnerich be required to pay the whole of that amount. The Court of Appeal found that Mr Arnerich breached his fiduciary duties to Vaco by causing it to distribute funds to himself and his family before ensuring that Vaco retained sufficient funds to meet DHC's claims. It found that the High Court should have determined the amount of Vaco's liability to DHC, and remitted the matter back to the High Court for that purpose. It also found that the High Court should have made an order that Mr Arnerich pay DHC the full amount of Vaco's liability to it, but remitted the issue of interest back to the High Court for determination.

Orders