CBA Consulting Group Limited (in liquidation) v Kellaway - [2017] NZHC 1333

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2015-419-272 [2017] NZHC 1333

BETWEEN
CBA CONSULTING GROUP LIMITED

(IN LIQUIDATION) Plaintiff

AND

ALISON MARGARET KELLAWAY Defendant

Hearing: 24 May 2017

Appearances:

S Rawcliffe for Plaintiff
M Francis for Defendant

Judgment:

19 June 2017

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on
19.06.17 at 2 p.m., pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

CBA CONSULTING GROUP LIMITED (IN LIQUIDATION) v KELLAWAY [2017] NZHC 1333 [19 June
2017]

[1] The plaintiff company, CBA Consulting Group Limited, was placed into liquidation by order of the High Court on 9 May 2011. It has brought proceedings against the defendant, Ms Alison Kellaway, as a trustee of the Chrysalis Trust (“the trust”). The other trustee is a Ms Christine Bear. The plaintiff alleges that the company made advances to the trustees which were repayable on demand. It has issued these proceedings to recover those demands. The total amount of the claim is
$33,742. The defendant has applied for summary judgment under r 12.2(2) of the

High Court Rules.

Background

[2] The defendant was a solicitor in practice in Hamilton. Ms Bear, the other trustee of the trust, was a client of hers, as was the plaintiff which was the company through which Ms Bear carried on her consulting business.

[3] The liquidators claim that the company has received total claims from creditors of $726,651.95, of which $225,564.47 is a preferential debt.1

[4] The liquidators have produced evidence of the financial accounts of the company which they assert prove the debts that the company now seeks to recover.

[5] The evidence of Mr H D Levin, one of the liquidators, is that the sum of

$21,492 was advanced from the company through the shareholders current account in the financial year ended 31 March 2009. It is further alleged that the financial statements were approved and adopted by the company via its shareholders, with the defendant signing a minute dated 10 February 2010 to confirm that this was so.

[6] The company also claims that, in the financial year ended 31 March 2010, a further $9,850 was transferred to the trust. These payments are evidenced by the company’s bank statements. No financial statements for the financial year ended 31
March 2010 have been produced, although Mr Levin says that draft financial

statements for that period were prepared. The payments making up the advances in

1 That figure is owed to the Inland Revenue Department.

the financial year ended 2009 take the form of automatic payments made out of the plaintiff’s bank account at fortnightly intervals, with each payment being either $750 or $200. That pattern continued throughout the financial year ended 2010. Mr Levin has assumed that the payments were drawings. He says that the defendant “has not suggested that the payments were anything other than drawings”. He further asserts that the company was insolvent at the time the payments were made. The view…

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: [2017] NZHC 1333
Decision Date: 19 June 2017

CaseChat Overview and Summary

CBA Consulting Group Limited (in liquidation) brought proceedings against Ms Alison Margaret Kellaway seeking to recover advances made to the Chrysalis Trust, of which Ms Kellaway was a trustee. The defendant, Ms Kellaway, applied for summary judgment under r 12.2(2) of the High Court Rules. The key issues before the court were whether Ms Kellaway, as a trustee, had approved the advances made to the trust and, if she had not, whether she had ratified the decisions made by the other trustee. The court also had to consider whether the defendant was entitled to a set-off against the debt that the trust owed to the company in liquidation. The court found that there were questions of fact that needed to be resolved by a trial, such as whether Ms Kellaway had actual or constructive knowledge of the transactions. The court concluded that it was not appropriate to grant summary judgment in this case as there were disputed issues of material facts that needed to be ascertained by the court. The application for summary judgment was therefore dismissed, and costs were reserved.

Orders