DHC Assets Ltd v Toon - [2016] NZHC 140

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-999 [2015] NZHC 140

BETWEEN
DHC ASSETS LIMITED A DULY

INCORPORATED COMPANY HAVING ITS REGISTERED OFFICE AT LEVEL

20, PWC TOWER, 188 QUAY STREET, AUCKLAND, 1010, NEW ZEALAND Plaintiff

AND

VICTORIA TOON AS LIQUIDATOR OF VACO INVESTMENTS (LINCOLN ROAD) LIMITED

Defendant

Hearing: 2 September 2015, 3 February 2016

Counsel:

L Turner for Plaintiff
P Davey for Defendant

Judgment:

12 February 2016

JUDGMENT OF DUFFY J

This judgment was delivered by me on 12 February 2016 at 10 am pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar

Solicitors:
Duthie Whyte, Auckland
Christopher Taylor Lawyers, Auckland

Counsel:
Lewis Turner, Barrister, Auckland
Peter Davey, Barrister, Auckland

DHC ASSETS LIMITED v TOON (AS LIQUIDATOR OF VACO INVESTMENTS) LIMITED [2015] NZHC
140 [12 February 2016]

[1] The plaintiff DHC Assets Ltd (DHC) is a construction company. During

2012 it carried out significant building works for Vaco Investments (Lincoln Road) Ltd (Vaco) for the development of a commercial property at Lincoln Road, Henderson (the development works). DHC alleges that Vaco has failed to make the final payment under the contract for those works; Vaco disputes this. Vaco has now been placed in voluntary liquidation, and the liquidator appointed by Vaco’s shareholder has rejected DHC’s proof of debt. DHC has brought this proceeding seeking leave to commence adjudication proceedings against Vaco or in the alternative an order removing the liquidator. The liquidator opposes both applications.

[2] Vaco sold the Lincoln Rd property in November 2012 for $8.4 million after the completion of the development works. Sometime after the sale of the property DHC issued a final account for $553,095 plus GST, comprising claims for variations and additional costs under the contract with Vaco (the alleged debt). Vaco refused to pay this account on the grounds that there were no outstanding payments owed by it to DHC. DHC pressed Vaco for payment throughout 2013 and in 2014. In late June
2014 DHC advised that it would be commencing adjudication proceedings under the Construction Contracts Act 2004 against Vaco. Vaco was then placed in liquidation by its shareholder, Antony Arnerich. Mr Arnerich appointed the defendant Victoria Toon as liquidator.

[3] Ms Toon issued a first report stating that there were no assets and indicating that no creditors’ meeting would be held. When DHC insisted on a meeting Ms Toon again indicated that there were no assets and that Vaco was a corporate trustee. Later she rejected DHC’s proof of debt.

[4] DHC contends that before Vaco was placed into voluntary liquidation, Mr Arnerich removed an estimated $2 million profit from that company. Mr Arnerich disputes that this amount was removed, but acknowledges that a sum of approximately $800,000 was removed. Whether the amount removed exceeded
$800,000 is of little importance here as even the lesser amount acknowledged to

have been removed by Mr Arnerich, if recovered, it would be sufficient to pay the alleged debt.

[5] DHC is in an invidious position. Now that Vaco is…

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 Toon

Details

AGLC: DHC Assets Ltd v Toon [2016] NZHC 140
Case: [2016] NZHC 140
Decision Date: 12 February 2016

CaseChat Overview and Summary

DHC Assets Ltd, a construction company, sought leave to commence adjudication proceedings against Vaco Investments (Lincoln Road) Ltd, a company in voluntary liquidation, or alternatively an order removing the liquidator to allow DHC to pursue the matter against the former shareholder and director, Antony Arnerich. The dispute arose from an alleged debt for building works completed by DHC for Vaco, which Vaco had refused to pay. The liquidator, Victoria Toon, opposed DHC's application. The primary issue before the court was whether DHC should be granted leave to pursue its claim for adjudication under the Construction Contracts Act 2004. The court held that DHC had an arguable case for the alleged debt, rejecting the liquidator's arguments that DHC had failed to exercise its rights under the contract, that the claim was barred by the dispute resolution clause, and that the claim was too late. The court also found that the dispute resolution clause could not preclude DHC from bringing proceedings under the Construction Contracts Act or the law of contract. The court concluded that DHC had made sufficient efforts to resolve the dispute with Vaco and that it would not prejudice any other creditors if the liquidation proceedings were put on hold to allow for adjudication. The court granted leave to DHC to commence adjudication proceedings against Vaco.

Leave is granted to DHC under s 248 of the Companies Act to commence adjudication proceedings against Vaco (in liquidation) under the Construction Contracts Act. The parties are granted leave to file memoranda on costs.

Orders