Batley v MacDonald - [2025] NZHC 974

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-239

[2025] NZHC 974

UNDER Part 18 of the High Court Rules 2016 and the Companies Act 1993

IN THE MATTER

of the liquidation of John. S. MacDonald Builders Limited (in Liquidation)

BETWEEN

WARWICK BRUCE BATLEY and HELEN WILHELMINA CATHARINA VAN GOCH

as trustees of the BATLEY FAMILY TRUST First Plaintiffs

NIDHA SINGH and VED PRAKASH

SINGH as trustees of the V P & N SINGH FAMILY TRUST

Second Plaintiffs

AND

JOHN STEWART MACDONALD

Defendant

Hearing: 3 March 2025

Appearances:

N Malarao and J Cordeiro for First and Second Plaintiffs No appearance for Defendant

Judgment:

28 April 2025

JUDGMENT OF WILKINSON-SMITH J

This judgment was delivered by me on 28/04/2025 at 3 pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors:
Norling Law Ltd, Auckland N Malarao, Auckland

BATLEY v MACDONALD [2025] NZHC 974 [28 April 2025]

Table of Contents Para No.

Introduction[1]

Background[9]

The pleadings[49]

Procedural history [54]

Issues[79]

The Evidence[80]

JSMB’s financial position[82]

Assessment on liquidation[99]

JSMB’s dealings with the plaintiffs’ payments[103]

Do the plaintiffs have standing? [117]

Plaintiffs’ entitlement to relief[122]

Did Mr MacDonald breach his director duties under the Act?[127]

Did Mr MacDonald breach the duty under s 135?[127]

Did Mr MacDonald breach the duty under s 136?[143]

Relief[160]

Result[165]

Costs[166]

Introduction

[1] The plaintiffs sue John Stewart MacDonald, for breach of director’s duties following the liquidation of a construction company, John S. MacDonald Builders Ltd (in liq) (JSMB). Mr MacDonald placed JSMB into liquidation on 18 January 2021.

[2]Both plaintiffs are unsecured creditors in the liquidation of JSMB.

[3] The first plaintiff, the Batley Family Trust, entered into a construction contract with JSMB around 28 September 2020 for the construction of a house in Cambridge.

[4] The contract required the Batley Family Trust to pay a deposit of $115,000, which it paid. Construction on the house ceased on 23 December 2020. Mr MacDonald placed JSMB into voluntary liquidation on 18 January 2021, owing the Batley Family Trust a total debt of $116,777.55, comprising their deposit and a subcontractor invoice.

[5] The second plaintiff, the V P & N Singh Family Trust, entered into a construction contract with JSMB around 23 September 2020 for the construction of two residential units in Hamilton.

[6] The V P & N Singh Family Trust paid a deposit of $172,500 to JSMB before JSMB went into liquidation. Construction on the V P & N Singh Family Trust property ceased on 18 December 2020.

[7] The plaintiffs’ case is that Mr MacDonald, as the sole director, breached his director duties by causing JMSB to trade recklessly and by allowing JSMB to incur obligations that he knew it would not be able to meet.

[8] The plaintiffs seek compensation from Mr MacDonald for their losses under ss 135, 136 and 301 of the Companies Act 1993 (Act).

Background

[9] JSMB was incorporated on 31 August 1998. Mr MacDonald is 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.

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Details

Case: [2025] NZHC 974
Decision Date: 28 April 2025

CaseChat Overview and Summary

In Batley v MacDonald, the High Court of New Zealand addressed a case involving the liquidation of John S. MacDonald Builders Limited (JSMB), a construction company. The plaintiffs, Warwick Bruce Batley and Helen Wilhelmina Catharina van Goch as trustees of the Batley Family Trust and Nidhi Singh and Ved Prakash Singh as trustees of the V P & N Singh Family Trust, sought compensation from John Stewart MacDonald, the sole director of JSMB, for breach of director’s duties following the company's liquidation. The court found that Mr MacDonald breached his duties under sections 135 and 136 of the Companies Act 1993 by engaging in reckless trading and allowing JSMB to incur obligations it could not meet. The plaintiffs, who were unsecured creditors, were awarded compensation for their losses. The court also ordered Mr MacDonald to pay the plaintiffs' actual and reasonable costs on an indemnity basis, pending an opportunity for him to provide a memorandum as to costs.

Orders