Colourplus Eastern Hire Limited (in liquidation) v Binney

[2014] NZHC 1085

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-004353 [2014] NZHC 1085

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of Colourplus Eastern
Hire Limited (In Liquidation)

BETWEEN

COLOURPLUS EASTERN HIRE LIMITED (In Liquidation)

First Plaintiff

VIVIEN JUDITH MADSEN-RIES and HENRY DAVID LEVIN as liquidators of Colourplus Eastern Hire Limited (In Liquidation)

Second Plaintiffs

AND

GRANT STEPHEN BINNEY Defendant

Hearing:	21 May 2014
Appearances:	K Kuang for Plaintiffs No appearance for defendant
Judgment:	21 May 2014

(ORAL) JUDGMENT OF ANDREWS J [Formal proof]

COLOURPLUS EASTERN HIRE LTD (In Liq) v BINNEY [2014] NZHC 1085 [21 May 2014]

[1]      The  first  plaintiff  seeks  judgment  by  way  of  formal  proof  against  the defendant  in  the  sum  of  $141,016.46  in  respect  of  advances  made  by  the  first plaintiff to the defendant.  The first plaintiff’s claim was commenced by way of a statement of claim filed on 27 September 2013.  The proceeding was served on the defendant on 10 October 2013.   On 20 January 2014, the plaintiffs applied to this Court for a formal proof hearing on the first plaintiff’s cause of action against the defendant, on the grounds that no statement of defence had been filed.  At the same time, the second plaintiffs advised the Court that they did not intend to pursue their cause of action against the defendant, for breach of director’s duties.  The Court has been invited to strike out that cause of action.

[2]      A formal proof hearing was approved by Lang J on 18 March 2014.

[3]      An affidavit has been sworn in support of the application for judgment by way of formal proof by Ms Madsen-Ries, one of the second plaintiffs.  She is one of the liquidators of the first plaintiff.  Ms Madsen-Ries deposes that the first plaintiff was incorporated on 20 October 2004.  It was put into liquidation on 14 November

2008.  The defendant was at all times a director of the company.  From incorporation until 1 November 2004, the defendant was an equal shareholder in the company with Mr Philip  George  Strange.    Mr  Strange  was  also  recorded  as  a  director  of  the company.   On 1 November 2004, the defendant’s shares in the company were registered at the Companies Office as having been transferred to the “GSB Family Trust”.

[4]      The defendant has completed a statement of his personal financial means, at the liquidators’ request.  In that statement, the defendant recorded himself as being a trustee of the GSB Family Trust, but advised that it was “not in use”.   In the defendant’s statement of the company’s financial position for the liquidators, the defendant recorded himself as the sole shareholder of the plaintiff, making no reference to the GSB Family Trust, or Mr Strange.   I accept Ms Madsen-Ries’ evidence that the defendant held shares in the plaintiff, either personally or as trustee for the GSB Family Trust.

[5]      The liquidators have determined, having reviewed the first plaintiff’s bank statements, that moneys totalling $141,016.46 had been taken from the first plaintiff by the defendant, for his personal benefit.   Those funds were taken in the period from 26 June 2006 to 14 November 2008.  Ms Madsen-Ries states in her affidavit that  the  liquidators  have  not  been  provided  with  copies  of  any  resolutions, agreements or other such records authorising the payments to the defendant as a salary, distribution, or payment under any other obligation to the defendant.   The liquidators therefore consider these payments to comprise a loan by the first plaintiff to the defendant, repayable on demand.

[6]      On 11 September 2013, the first plaintiff made demand on the defendant for repayment.  No payment has been received from the defendant.

[7]      I accept the submission made for the first plaintiff that advances made by a company to its shareholder are debts owed by the shareholder to the company and that such advances are repayable on demand.   See Thom Contractors Ltd (In Liquidation) v Thom,1 Samarang Developments Ltd (In Liquidation),2 and New Zealand Game Meats Export Ltd v Yat Fan Lau.3

[8]      I also  accept  that  the  first  plaintiff  has  made advances  to  the  defendant totalling $141,016.46, and that the defendant is liable to repay those advances.  I also accept that demand has been made on the defendant, and that no payment has been made.

[9]      Accordingly,  I  am  satisfied  that  judgment  should  be  entered  against  the defendant in favour of the first plaintiff in the sum of $141,016.46, together with interest pursuant to the Judicature Act 1908, as from 11 September 2013 (being the date the plaintiff made demand for repayment).  The second plaintiff ’s claim against

the defendant is struck out.

1      Thom Contractors Ltd (In Liquidation) v Thom HC Auckland CIV-2008-404-6829, 28 April

2009 at [16].

2      Samarang  Developments  Ltd  (In  Liquidation)  HC  Christchurch  CIV-2003-409-2094,  30

September 2004 at [55].

3      New Zealand Game Meats Export Ltd  v Yat Fan Lau HC Whangarei CP34/98, 19 March1999.

[10]     The plaintiff is also entitled to an order for costs, on a 2B basis, together with

disbursements as fixed by the Registrar.

Andrews  J