Blanchett v RBI Limited - [2014] NZHC 1602

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

CIV 2012-443-472 [2014] NZHC 1602

IN THE MATTER
of the liquidation of TSSN LIMITED

formerly known as KLN LIMITED and the STEPPING STONES NURSERY LIMITED (in liquidation)

BETWEEN

DAVID MURRAY BLANCHETT and GRANT DAVID McQUOID Applicants

AND

RBI LIMITED Respondent

Hearing:
16, 17 and 18 October and 18 November 2013

9 December 2013 and 3 February 2014

Appearances:

K J Crossland and S Langston for applicants
S A Grant and B M Saldanha for respondent

Judgment:

9 July 2014

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 9 July 2014, at 12.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Shieff Angland, Auckland
Sean Kelly Lawyers, Auckland

BLANCHETT and McQUOID v RBI LIMITED [2014] NZHC 1602 [9 July 2014]

Table of Contents

Introduction  [1] The parties  [5] Background to the liquidation
TSSN’s business  [10]
TSSN’s financial position in 2009  [13] Refinancing and restructuring of TSSN’s business  [21] TSSN’s liquidation  [31] The payments in dispute   [33] The application and opposition  [37] The issues for determination  [47]

Insolvent transaction
Two elements [48]
Inability to pay debts when due [51] The parties’ contentions [55] Summary of material evidence [57] Discussion [61] Was the ASB debt due at material times? [86] Receipt of more than in liquidation [93] Who made the payments? [95] Was there a continuing business relationship? [109] What was the effect of the continuing business relationship? [123]

Is RBI entitled to the statutory defence?
General [134]
Attribution of knowledge [140] Suspicion and reason to suspect [158] Good faith [169] Giving of value/alteration of position [170] Conclusion [171]

What orders should be made? [172]
Decision [173]

Introduction

[1] The applicants are the liquidators of TSSN Limited (in liquidation) (TSSN). They have applied to set aside, as insolvent transactions, 20 payments that TSSN made to the respondent, RBI Limited (RBI), totalling $543,472.32, in the two years prior to commencement of the liquidation. This application is made under s 292 of the Companies Act 1993 (the Act). They also seek orders for repayment, together with interest and costs.

[2] RBI resists the making of all the orders sought. It says that these are insolvent transactions but claims, in the alternative, that if they are found to be so, it is entitled to the benefit of the statutory exemption in s 296(3) of the Act.

[3] The central issues that arise on this application, therefore, are whether the payments made to RBI were insolvent transactions within the meaning provided by the Act and, if so, whether RBI has shown that it is entitled to the statutory defence. The first includes an issue as to whether all the payments made after 1 June 2010 were made by TSSN or by a phoenix company.

[4] For the reasons I will now give, I have come to the conclusion that the majority of the payments are not insolvent transactions, but for those that are (amounting to $9,623.29) RBI…

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 Blanchett v RBI Limited

Details

AGLC: Blanchett v RBI Limited [2014] NZHC 1602
Case: [2014] NZHC 1602
Decision Date: 9 July 2014

CaseChat Overview and Summary

The case of Blanchett v RBI Limited involved an application by the liquidators of TSSN Limited to set aside 20 payments totaling $543,472.32 made to RBI Limited, a supplier of international freight services, as insolvent transactions under the Companies Act 1993. The central issues were whether the payments were insolvent transactions and, if so, whether RBI was entitled to a statutory defense. The payments in question were made in the two years prior to TSSN's liquidation in May 2011. The court found that TSSN was able to pay its due debts for most of 2009 but became unable to do so from December 2009. It was determined that RBI received more from the payments made from January 2010 onwards than it would have in the liquidation, except for those made under a continuing business relationship. The court found that a continuing business relationship existed between TSSN and RBI, but that the deemed single transaction did not amount to an insolvent transaction. However, certain payments made from January 2010 onwards were deemed insolvent transactions, totaling $9,623.29. RBI was not entitled to the statutory defense under s 296(3) of the Act as the knowledge of the common directors, Mr P Groves and Mr E Groves, was to be attributed to it, and that knowledge was sufficient to raise suspicion of insolvency. The court ordered RBI to repay the insolvent transactions to the liquidators with interest from the date of receipt of the component payments until the date of repayment. No order as to costs was made.

Orders