DHC Assets Ltd v Arnerich - [2019] NZHC 1695

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-307

[2019] NZHC 1695

UNDER The Companies Act 1993

BETWEEN

DHC ASSETS LIMITED

Plaintiff

AND

ANTONY IVO ARNERICH

Defendant

Hearing:
31 October, 1, 2, 5, 6, 7, 8, 9, 12 November 2018, 11, 12, March

2019

Counsel:

F J Thorp & L Turner for Plaintiff

J D McBride & A J Steel for Defendant

Judgment:

27 September 2019

Reissued:

2 October 2019

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 27 September 2013 at 3:30 pm Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Duthie Whyte, Auckland Doug Cowan, Auckland

DHC ASSETS LTD v ARNERICH [2019] NZHC 1695 [27 September 2019]

TABLE OF CONTENTS

Introduction [1]

Background [5]
Ownership of Vaco Investments (Lincoln Road) Ltd and Lincoln Road [5]

The ASB tenancy [11]

The construction contract with Clearwater Construction Ltd  [14]
The Design Build construction contract documents  [23]
The Contract Performance Agreement (CPA)  [25]

The “Contract Agreement” [29]

The agreement to lease – Vaco and ASB [33]
The General Conditions of Contract – NZS 3910:2003 [34]

Time for completion and extension of time claims [44]

Process for resolving disputes arising under the contract [46]
Engineer’s Review [48]

The pilings and foundations delay commencement of construction [49]

CCL assigns contract to DHL [70]

Plaintiff ’s payment claims  [71]
CCL notifications of its intention to lodge extension of time claims                   [80]
The four extension of time claims  [96]

Vaco disputes the EOT claims and challenges CCL’s contract
variation claims  [97]
CCL charging of Preliminary & General costs on ASB contract variations     [120]
Mr Arnerich comments on Payment Claim 16 to the contract engineer           [125]
The CCL letter to Mr Beagley (6 March 2013) enclosing EOT
related materials and submissions  [129]
CCL Payment Claim 17  [131]
Vaco settles the sale of Lincoln Road and the proceeds are applied
and distributed  [137]
The contract engineer certifies $0.00 for Payment Claim #17  [142] Draft Engineer’s Review No 2 (24 April 2013)  [143] CCL renews efforts to obtain determination of its payment claims  [162] Vaco settles variation claims with the ASB  [189]
Vaco is put into voluntary liquidation  [192]
High Court grants leave to DHC to commence adjudication
proceedings against Vaco  [203]
The arbitration  [216]

The plaintiff’s claim [219]

The defendant’s case and submissions [221]

Law [238]

Duty of directors to act in good faith and in best interests of company [238]

Director’s duties and trustee duties [250]

The debt and issue estoppel [254]

CCL’s position as a creditor [270]

The construction contract [276]

Variations [277]

Extensions of time [282]

Resolving those disputes [285]

The Contract Engineer [288]

The period following the sale of Lincoln Road [292]

The distributions [292]
The status of CCL’s claims during the period from early 2013
to Vaco’s voluntary liquidation [309]

Did Mr Arnerich breach his director’s duties? [328]

Do the matters relied on by Mr Arnerich justify him proceeding on the basis that CCL…

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 DHC Assets Ltd v Arnerich

Details

AGLC: DHC Assets Ltd v Arnerich [2019] NZHC 1695
Case: [2019] NZHC 1695
Decision Date: 27 September 2019

CaseChat Overview and Summary

DHC Assets Limited sought to recover from Antony Ivo Arnerich, the amount it said it was owed as an unpaid creditor of Vaco Investments (Lincoln Road) Limited (Vaco). Vaco had developed commercial premises at Lincoln Road, Henderson, which were leased to the ASB Bank. Following completion of the development, the Lincoln Road property was sold, and Vaco was placed into voluntary liquidation. DHC, trading as Clearwater Construction Ltd, alleged that it had not been paid for all the work it performed under the construction contract, and that Arnerich, who was the sole director of Vaco, had procured distributions and payments by Vaco shortly prior to it being placed into liquidation. Arnerich knew that DHC claimed to be an unpaid creditor of the company and that by making the payments and distributions Vaco would be left without sufficient funds to satisfy DHC’s claim. The Court found that Arnerich had breached his director’s duties by failing to act in good faith, by failing to act in Vaco’s best interests, by distributing Vaco’s assets to the detriment of a creditor, and by preferring his interests and those of other persons associated with him over the interests of Vaco’s creditors. Pursuant to s 301(1)(c) of the Companies Act 1993, the Court ordered Arnerich to pay directly to DHC the sum of $367,768.12, being the amount awarded to DHC in the adjudication proceedings, with interest from the date of the adjudication compounding monthly at the rate of 12.4 percent. The plaintiff was also entitled to costs.

Orders