Glenvar Property Holdings Ltd (in liquidation) v Terra3 Limited formerly k/a BDK Holdings Limited
[2017] NZHC 2463
•6 October 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-1774 [2017] NZHC 2463
IN THE MATTER of the liquidation of Glenvar Property
Holdings Limited (In Liquidation)
UNDER
the Companies Act 1993
BETWEEN
GLENVAR PROPERTY HOLDINGS LTD (IN LIQUIDATION)
First Plaintiff
AND
GRANT BRUCE REYNOLDS AS LIQUIATOR OF GLENVAR PROPERTY HOLDINGS LIMITED (IN LIQUIDATION)
Second Plaintiff
AND
TERRA3 LIMITED FORMERLY KNOWN AS BDK HOLDINGS LIMITED
First Defendant
AND
SHIAI CUI Second Defendant
Hearing: 10, 11 April 2017
Further pleadings filed by leave on 18 May 2017
Appearances:
B Pamatatau for the Plaintiff
CT Patterson and EJ Grove for First and Second DefendantsJudgment:
6 October 2017
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 6 October 2017 at 5.00 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
GLENVAR PROPERTY HOLDINGS LTD (IN LIQUIDATION) v REYNOLDS [2017] NZHC 2463 [6 October 2017]
Background
[1] The first plaintiff, Glenvar Property Holdings Limited (Glenvar), was incorporated on 23 April 2013 as a commercial property investment company. It is now in liquidation. The second plaintiff, Mr Bruce Reynolds, is an insolvency practitioner appointed as Glenvar’s liquidator. The first defendant, Terra3 Limited, was formerly known as BDK Holdings Limited. It is convenient to refer to the company throughout as “BDK”. It was incorporated on 20 November 2013 as an investment company in commercial property. The second defendant, Ms Shiai Cui, is a property investor.
[2] Ms Cui is retired. She lives between China and Auckland. Ms Cui has a daughter, Juan Lin, who until August 2016 was the director of BDK. Glenvar was set up by Ms Lin as a property investment vehicle for her mother and others. Mr Yue Long and Ms Wenyuan Tang were the directors of Glenvar from its incorporation, and Yue Long was registered as the sole shareholder. Between August 2013 and March 2014, however, Yue Long ceased being a director of Glenvar, leaving Ms Tang as the sole registered director during that period. In March 2014, Ms Tang retired as a director and Yue Long was re-appointed as sole director. Initially, Mr Long was one of the shareholders of BDK, but apparently no longer owns shares in that company.
[3] The plaintiffs sue BDK and Ms Cui to recover what are alleged to be five pre-liquidation advances, allegedly made to them by Glenvar. The plaintiffs seek judgment in the sum of $1,000.00 against BDK for the first advance; $130,000.00 against BDK and Ms Cui for the second advance; and a total of $177,465.99 against Ms Cui for the third, fourth and fifth advances. Interest and costs are also sought.
[4] Glenvar went into liquidation on 7 November 2014 on the application of an unsecured creditor in the sum of $133,129.00. After Mr Reynolds was appointed as liquidator, he investigated the business records of Glenvar, including bank records, so far as he was able to obtain them. It is an unusual feature of the case that the only evidence for the plaintiff was Mr Reynolds’s opinion of events of which he had no direct knowledge, based on assumptions and inferences he drew from the documents
he obtained. While it is not uncommon for a liquidator to reconstruct the pre- liquidation activities of a company, it is for the Court and not the liquidator to decide the facts. The liquidator’s opinion will not often meet the test of substantial helpfulness required for admissibility under the Evidence Act.1 Mr Reynolds did not explain why no evidence was called from persons who were actually involved in the transactions on which he relied to found the claims against the defendants.
[5] The defendants did not object to the admissibility of Mr Reynolds’s opinions, but I made it clear to Mr Pamatatau during the hearing that I would not consider myself bound to accept Mr Reynolds’s conclusions or the inferences he drew from documents, particularly where there was credible direct evidence which contradicted them.
[6] BDK and Ms Cui dispute Mr Reynolds’s contention that they owe Glenvar the amounts alleged. BDK’s position is that it never received any sums which could be considered advances from Glenvar, and never agreed that it would reimburse Glenvar for any money it paid to third parties. Ms Cui’s position is that while she did receive the sums of $130,000.00 and $177,465.99 from Glenvar, she repaid the former and the latter was a repayment of sums she had advanced to Glenvar to assist with the purchase of a property on Khyber Pass Road. She also asserts that she has an affirmative defence of a set-off against an amount of $801,000.00 that she says Glenvar owes her.
Summary of issues
[7] Counsel helpfully provided a joint memorandum setting out the parties’ agreement that the following are the significant disputed facts that required determination at trial:
(a) Whether Glenvar made an advance of $1,000.00 to BDK (the first advance).
(b)Whether BDK has a set-off in relation to the $1,000.00 deposit paid by Glenvar for the purchase of 195 Khyber Pass Road that was nominated by Glenvar and Ms Cui as joint purchasers to BDK to complete.
(c) Whether Ms Cui repaid the sum of $130,000.00 (the second advance)
to Glenvar.
(d)Whether Glenvar advanced the total sum of $177,465.99 to the solicitors acting for Ms Cui to assist with her purchase of Lots 2, 3, and 4 of 9 – 11 Lavender Court in the following instalments (the third, fourth and fifth advances):
(i) $10,000.00 on or about 24 October 2013;
(ii) $142,465.99 on or about 12 November 2013; and
(iii) $25,000.00 on or about 13 November 2013.
(e) Whether the sum of $801,000.00 was advanced by Juan Lin separately, or together with Ms Cui, to the solicitors acting for Glenvar to assist with its purchase of 254 Glenvar Road.
The first advance
[8] It is common ground that there was a joint agreement between Glenvar and Ms Cui, in August 2013, to purchase the property at 195 Khyber Pass Road, Auckland. Glenvar initially, and later Ms Cui, were named in the agreement for sale and purchase as the purchasers and signatories, with the option to nominate another purchaser. Glenvar contributed $1,000.00 towards payment of the deposit and Ms Cui contributed $449,000.00. Glenvar’s contribution of $1,000.00 is said to be the first advance.
[9] Glenvar and Ms Cui were served with a settlement notice for failing to complete the purchase as required under the agreement for sale and purchase. The
director of Glenvar, Yue Long, and Juan Lin formed BDK on 20 November 2013 after obtaining the agreement of other investors to support the purchase of the Khyber Pass Rd property through a new company. Ms Lin became the director of BDK. Glenvar and Ms Cui nominated BDK as purchaser on 25 November 2013. BDK accepted the nomination and agreed to pay all sums remaining on the purchase, including penalty interest and legal costs which amounted to approximately
$27,000.00. BDK completed settlement soon after.
[10] The plaintiffs say BDK obtained the benefit of Glenvar’s $1,000 contribution to the purchase price and that a resulting trust should be presumed. Mr Pamatatau relies on this passage in Snells Equity as authority:2
Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of joint purchase by A and B in shares proportionate to their contributions.
[11] I am not persuaded that the presumption arises on the facts of this case and, even if it does, I am more than satisfied that the defendants' case rebuts it. Although the plaintiffs' claim for $1,000 consumed an inordinate amount of hearing time for a proceeding in this Court where more substantial sums are at issue, the evidence served to illustrate the nature of the relationships between the companies in which Ms Cui, her daughter Ms Lin, and Mr Long were shareholders or investors from time to time, and between the individuals.
[12] Ms Cui gave evidence that in 2013, following her daughter's advice, she made a number of property investments in Auckland, mostly using Glenvar as a vehicle. She understood that the company had been set up by friends of her daughter, including Mr Long with whom she dealt most frequently. Sometimes she worked directly with Simpson Lawyers, the law firm also acting for Glenvar. Ms Cui explained that Mr Long or Ms Lin would let her know about property deals which they thought would be good investments and she would invest. She said that if she had to pay any money it was either paid to the law firm or, if Mr Long asked,
to his bank account in China. Ms Lin had a power of attorney so she could handle most of the decisions and paperwork for the investments by her mother. On occasions the mother and daughter invested together, though Ms Cui said Ms Lin did not have much money of her own in New Zealand.
[13] Unsurprisingly, Ms Lin's evidence corroborated that of her mother. She explained that Glenvar was the vehicle for the purchase by the company and her mother of the property in Khyber Pass Road, but that it became apparent that Glenvar was unable to raise sufficient funds to complete the purchase. Ms Lin explained that, knowing that her mother had contributed $449,000 to the payment of the deposit on the property on account of a total purchase price of $4.5 million, she did not wish her mother to lose her investment if the deposit was forfeited as a result of Glenvar’s inability to settle. Also, penalty interest was being charged by the vendor at a rate of 14 per cent per annum, or $1,553.42 a day.
[14] BDK was formed to take over the purchasers' interests and complete the purchase. It appears on the evidence that other investors contributed funds to the total of $641,652.89 which was paid into BDK’s account by Ms Lin, but on her mother's behalf. The balance of the purchase price for the Khyber Pass Road property was obtained from a bank loan secured by a mortgage. I infer from the closely held nature of the company that it was intended that Ms Cui’s contributions to the purchase price would be protected by her having a beneficial interest in BDK.
[15] Three features of the documentary evidence related to this transaction served to illustrate the difficulties faced by Mr Reynolds in trying to reconstruct the events which, he says, gives rise to the indebtedness of the defendants to the plaintiff.
[16] First, an explanation of sorts for Ms Cui as appearing in the agreement for sale and purchase of the Khyber Pass Road property as a co-purchaser with Glenvar is provided by an undated and unsigned handwritten note. It reads:
Attn: Simpson/Lulu
Re: 195 Khyber Pass
We thought the best combination would be having both names Glenvar
(Company) plus Shiai Cui (person) into the contract. So it won't confuse the
vendor, and Legally we can use the credit 99k which Shiai Cui has got in your trust A/c to pay the 1st deposit.
We now have both signed the agreement.
Before you send it over to the vendor's lawyer, pls review the contract carefully and let me know if there is any usual terms that may cause problems.
cheers.
[17] The evidence does not establish who wrote the note, although I infer it may have been Mr Long. There is then an authority to transfer funds dated
30 August 2013 related to the payment of the further $350,000 required to meet the purchasers' obligations to pay a deposit. It reads:
30 August 2013
AUTHORITY TO TRANSFER FUND
I, SHIAI CUI hereby authorise Simpson Tong of SIMPSONS LAWYERS to transfer $350,000.00 on Monday the 2th [sic] Sept 2013 out of the sales file for Lot 4 (CUI 1256/4) to my purchase file (195 Khyber Pass Road File number: GLE 1230-3) to be paid to Holland Beckett Lawyer as further payment.
SIGNED:
SHIAI CUI
The authority is signed. Ms Cui said in evidence that the signature on the authority was not hers and she could not identify whose it was.
[18] A third document related to the transaction is also instructive of the difficulties in recreating these events merely from what appears on the face of the documents. It is a file statement produced by Simpsons Lawyers and obtained by Mr Reynolds purporting to record transactions in the law firm's trust account in the name of Glenvar Property Holding Limited between 15 July 2013 and
25 February 2014 related to the purchase of the Khyber Pass road property. The opening entry, dated 13 August 2013, is a credit of $1,000 attributed to Glenvar. It is followed by a further deposit on the same date, said to be by journal transfer from the file of "Mr" Shiai Cui, of $99,000 and then a payment of $100,000.00 to the vendor's solicitors, Holland Beckett, for the purchase of 195 Khyber Pass Road by way of deposit. On 2 September 2013 a credit of $350,000 appears as a result of a
further journal transfer from "Mr" Shiai Cui for the payment of the second deposit and the payment of that sum also to Holland Beckett. A credit of $641,652.89 appears, dated 26 November 2013, as having been received from Glenvar and also a further credit of $6,144.52 on the same date, also said to have been funded by Glenvar. In combination with the drawdown of the Kiwibank loan of $3,463,855.48, the funds were sufficient to complete the purchase on that date and to meet legal fees and other expenses.
[19] It was on the strength of the entries attributing the two deposits on
26 November 2013 to Glenvar that Mr Reynolds maintained from the time the proceeding was commenced until the completion of discovery that BDK and Ms Cui in fact owed Glenvar considerably more than the $1,000 which is now claimed. It was only after Mr Reynolds came into possession of other documents clearly establishing that the deposits on 26 November 2013 were attributable to BDK, which had, by then, become a client of Simpsons Lawyers, that Mr Reynolds acknowledged that the law firm had not established a separate trust account file for the new company and continued to record the transactions related to the Khyber Pass Road purchase in the original Glenvar account. The only evidence in the statement of a change in the identity of the purchaser client appears on 25 February 2014, when the firm paid the sum of $2,751.94 to BDK after having received from Holland Beckett retained funds which had been held on account of the vendor and which must have represented an overpayment. The entry records the payment to BDK as "balance to client".
[20] I return to the claim by Mr Reynolds that Glenvar is entitled to reimbursement of the deposit contribution of $1,000 it made on 13 August 2013. Mr Patterson submitted on behalf of the defendants that, rather than there being a presumption that Glenvar did not intend that the deposit would be a gift to BDK, the inference to be drawn from the transactions was that the subsequent incorporation of BDK was part of a rescue arrangement to both protect Ms Cui's $449,000 contribution to the deposit for the Khyber Pass Road property and to stop the haemorrhaging of over $1,500 per week in penalty interest. I accept the submission that I should infer that the sole shareholder of Glenvar, Mr Long, acknowledged that
the $1,000 deposit was more than off-set by the assumption by BDK of Glenvar’s
additional liability for penalty interest in the purchase.
[21] Just as Mr Reynolds's original assumptions that Glenvar had paid the entire deposit of $450,000 and the further advance of over $641,000 to complete the purchase were entirely misplaced, so too is the suggestion that BDK should be presumed to have been a trustee of the $1,000 actually contributed to the transaction by Glenvar. There is nothing in the evidence to indicate that BDK accepted any such liability nor that Glenvar sought to claim it at the time the Deed of Nomination was executed.
[22] The plaintiffs' claim against BDK in relation to what is said to be the first advance fails accordingly.
The second advance
[23] A sum of $130,000.00 was advanced by Glenvar to Ms Cui on or about 1
October 2013 from the proceeds of its sale of property at 20 and 34 Park Ave Birkenhead, to assist with a deposit on the purchase of a property at 73 Lake Road Takapuna. BDK was also nominated subsequently by Ms Cui to become the purchaser under that agreement for sale and purchase. Glenvar submits that the advance has never been repaid. It says that BDK has had the advantage of not having to fund that portion of the purchase price which was paid to acquire the Lake Road property and that it should be required to reimburse Glenvar. It also says that Ms Cui is liable, in any event, to repay the advance.
[24] The defendants admit that Glenvar paid $130,000.00 to Ms Cui on or about
1 October 2013. I accept Mr Patterson’s submission that whether BDK benefited from the advance to Ms Cui is beside the point: there is no evidence of any contractual arrangement between Glenvar and BDK that would entitle Glenvar to seek repayment by BDK of its advance to Ms Cui. The claim against BDK for the second advance fails accordingly.
[25] Ms Cui says she repaid the $130,000.00 as part of a total sum of $220,000.00 she paid to Mr Long, Glenvar’s sole shareholder, by depositing funds into his bank account in China in four instalments. Ms Cui gave only vague evidence about the circumstances of the three withdrawals appearing in the records of her bank account in China, from which she says the payments were made to Mr Long, and she could not identify the fourth. The amounts shown in her bank statements do not correspond with her evidence. In any event, there is no evidential basis for claiming that those payments to Mr Long directly ought to be treated as payments to the company which had made the advance.
[26] I am satisfied that the plaintiffs’ claim that Ms Cui received and did not repay
$130,000.00 advanced to her by Glenvar for the Lake Road purchase (the second advance) is proved on a balance of probabilities. I address below the alternative defence of set-off raised in respect of this and the other claims against Ms Cui.
The third, fourth and fifth advances
[27] Mr Reynolds says that in mid-2013 Ms Cui entered into an agreement for the purchase of Lots 2, 3 and 4 of a property at 9 – 11 Lavender Court, Remuera. Ms Cui is alleged to have received three advances from Glenvar totalling
$177,465.99, paid to the solicitors acting for her in the purchase of the Lavender
Court properties. These are described as the third, fourth and fifth advances: (a) $10,000.00 on or about 24 October 2013;
(b) $142,465.99 on or about 12 November 2013; and
(c) $25,000.00 on or about 13 November 2013.
[28] Ms Cui does not deny that she received the benefit of these payments from Glenvar, but she says that the sums were a partial repayment of the $449,000.00 plus legal costs that she had advanced to Glenvar to fund the deposit for the purchase of the Khyber Pass property, prior to the nomination of BDK as the purchaser. Ms Cui says that due to the payments she made to fund the deposit and legal costs of the
Khyber Pass purchase, totalling $453,517.80, she had insufficient funds in her account with her lawyers to fund the settlement of the Lavender Court purchase. These three advances enabled the purchase of Lot 4 of Lavender Court to occur, to prevent jeopardising the prearranged on-sale of Lot 4 which Ms Cui says was the source of the funds for Khyber Pass purchase. The consequence of the Lot 4 on-sale falling through would mean that the purchaser would try to recover the deposits and other moneys paid. Ms Cui says at the relevant times it was in Glenvar’s interests, as well as hers, to avoid that fallout.
[29] I accept that there is a tenable basis for this argument, arising from the transfer in the Simpsons Lawyers' trust account of the $99,000 being held from the deposit paid for the purchase of Lot 4, Lavender Court to enable the payment of the first tranche of the deposit for the Khyber Pass purchase. Moreover, when a
$600,000 payment was made by the purchaser of Lot 4 into the trust account on
30 August 2013, a further $350,000 of that sum was used to pay the balance of the deposit for what was then intended to be Glenvar's purchase of the Khyber Pass property. The funds from the Lavender Court purchase were also used to meet Simpsons Lawyers' legal fees for the Khyber Pass property purchase.
[30] As at 6 September 2013, a total of $453,517.80 had been used from the funds available through the on-sale of the Lavender Court property to pay the deposit and legal fees for the Khyber Pass purchase. At the time Ms Cui was required to settle the purchase of the Lavender Court property on 13 November 2013, there were insufficient funds held on trust to enable her meet her obligations. I am satisfied that the payments made by Glenvar on 24 October 2013, 12 November 2013 and
13 November 2013 were just sufficient to enable the purchase of Lot 4 to occur on
14 November 2013 and then for it to be on-sold.
[31] I find it to be probable, therefore, that the three advances were in the nature of reimbursing payments and that they did not result in Ms Cui owing Glenvar the total of $177,465.99. The plaintiffs’ claim against Ms Cui based on the purported third, fourth and fifth advances fails accordingly.
[32] The evidence of Ms Cui and Ms Lin describing what may be regarded as somewhat loose arrangements between the parties to commercial property dealings, where the nature and purposes of transfers of funds between individuals and corporate entities is not always supported by documentary records, would not be regarded as uncommon by judges of this Court hearing cases involving commercial transactions between Chinese-born New Zealand residents. I found Ms Cui's and Ms Lin's description of their relationship with Mr Long and with each other, in terms of their respective investments in property and the flexible manner in which corporate entities were used, even though it was vague at times, to be convincing overall. I accept as credible Ms Cui's evidence in which she said:
If Mr Long said to pay money into his account in China, I did, and if he said to pay into Simpson Lawyers' account, I did that. I left most of the day-to- day decisions and details about the investments up to my daughter and Yue Long and I trusted them ... There were a lot of times when money I paid was transferred across from my files to Glenvar, or where I and my daughter paid money for Glenvar and Glenvar later paid us back by transfers such as the ones Mr Reynolds refers to …. The understanding was always it would be sorted out down the track. That was how things worked. We made loans, they were repaid, and it also worked the other way round. If Mr Long said I should agree to be nominated as the purchaser of a property, I would agree, and if he said I should agree to nominate someone else as purchaser, I would agree with that, and if he said money needed to be transferred to another purchase, we let him. This was because we trusted him to sort out the money between Glenvar and me and my daughter honestly. So far as I know he was honest with us.
[33] It was in the context of this evidence that Ms Cui and also Ms Lin referred to what might otherwise have appeared to be a highly unusual transfer of $801,000 paid by Ms Lin towards Glenvar's purchase of a property at 254 Glenvar Road, Torbay, on
2 May 2013. Ms Lin says the transfer was made on behalf of her mother, Ms Cui.
[34] This is the transaction which is the subject of the last of the issues counsel agreed is to be determined by the Court. It was the subject of an agreement about amended pleadings filed by leave of the Court after the completion of the hearing, so as to provide a proper footing for what the parties had understood to be an issue in the proceeding.
[35] On 2 May 2013, Ms Lin received a net payment of $931,423.08 which she identified as the proceeds of the sale of a property in McClymonts Road, Albany of which she was the registered proprietor. That day she paid two cheques - for
$501,000 and $300,000 respectively - to Glenvar for the purchase of the property at
254 Glenvar Road for a total purchase price of $1.5 million. Although there is no documentary evidence recording any interest held by Ms Cui in the McClymonts Road property, Ms Lin's evidence was that her mother was the beneficial owner of that property. She said also that it was intended that her mother would have a beneficial interest in the Glenvar Road property. It was her evidence that she did not have funds of that amount in New Zealand and that the transactions were carried out by her on her mother's behalf.
[36] Ms Lin's evidence on this point was corroborated by Ms Cui. Although she acknowledged she could not recall the details of the transactions, Ms Cui confirmed that her daughter had little money of her own and that investments of the size which had been made in the McClymonts Road property, and which was subsequently applied towards the purchase of the Glenvar Road property, were funded by Ms Cui herself out of money she had made running her antiques business in China.
[37] The direct evidence of Ms Lin and Ms Cui about their dealings with each other is consistent with the power of attorney which Ms Cui granted in favour of her daughter. I accept it and consider that it is sufficient to rebut any contrary inferences which might be drawn from the absence of any documentary proof of Ms Cui's beneficial interest in the Glenvar Road property. There is no documentary or other evidence contrary to that of Ms Cui and Ms Lin explaining the transaction and no proof that Glenvar, or Mr Long on Glenvar's behalf, repaid the $801,000 Glenvar received in May 2013. That transaction was not taken into account by Mr Reynolds in his analysis of Glenvar's dealings with Ms Cui and Ms Lin because it pre-dated by some three months the opening of the Simpsons Lawyers account related to the purchase of the Khyber Pass Road property.
[38] Mr Patterson submits that the defendants are entitled to rely on s 310 of the Companies Act 1993 as requiring a statutory set-off where there are debts between one person and a company. The section provides:
310 Mutual credit and set-off
(1) Where there have been mutual credits, mutual debts, or other mutual dealings between a company and a person who seeks or, but for the operation of this section, would seek to have a claim admitted in the liquidation of the company,—
(a) an account must be taken of what is due from the one party to the other in respect of those credits, debts, or dealings; and
(b) an amount due from one party must be set off against an amount due from the other party; and
(c) only the balance of the account may be claimed in the liquidation, or is payable to the company, as the case may be….
[39] The plaintiffs argue, however, that the doctrine of privity of contract creates a general rule that a contract cannot confer benefits on third parties, being persons who are not party to the contract in a way which gives those third parties an independent right to enforce the provisions of the contract which are for their benefit.3 Since the
$801,000.00 was paid by Ms Lin out of her bank account, Ms Cui does not have
standing to bring an action in contract seeking repayment from Glenvar of an advance which, at best, was made by an agreement between Juan Lin and Glenvar only and does not confer any rights or benefits on Ms Cui.4 Accordingly, s 4 of the Contracts (Privity) Act 1982 cannot be relied on by Ms Cui.
[40] Although in some respects the evidence adduced by both the plaintiffs and the defendants was incomplete, I am satisfied on a balance of probabilities that the
$801,000.00 advance to Glenvar was made by Ms Lin on behalf of Ms Cui and that
Ms Cui did not receive any corresponding benefit from it. As Ms Lin was acting as
her mother’s agent, the privity issue does not arise. It follows, in my view, that
3 New Zealand Shipping Co Ltd v AM Satterthwait & Co Ltd [1974] 1 NZLR 505 (PC).
4 Refer to Section 4, Contracts (Privity) Act 1982
Glenvar was indebted to Ms Cui in that amount and that the debt must be brought into account under the provisions of s 310 of the Companies Act in respect of the liquidator’s claims against Ms Cui.
[41] Setting-off that sum against the $130,000 payment made by Glenvar towards the purchase of the Lake Road property (the second advance) must be treated on the evidence as an advance by Glenvar to Ms Cui which was not repaid. Applying s 310, results in Glenvar’s net indebtedness to Ms Cui being reduced to $671,000.
[42] Even if I had not been satisfied that the third, fourth and fifth so-called advances totalling $177,465.99 were in fact reimbursing payments to Ms Cui, the application of s 310 to that sum would have left a net indebtedness to Ms Cui of over
$490,000 which could have been claimed by Ms Cui in the liquidation.
[43] When Mr Pamatatau pointedly asked Ms Lin whether Ms Lin or Ms Cui had filed a proof of debt in the liquidation, he was met with a response which made it clear that Ms Lin had no idea what he was talking about.
[44] The somewhat artificial reconstruction by Mr Reynolds of Glenvar's property dealings so far as they involved Ms Lin, Ms Cui, Mr Long and BDK was based on assumptions that all transactions would be properly documented; that such documents as are available could be accepted at face value; and that the absence of documentation must mean that a transaction had not occurred. His resulting claims, however, fail to account for the direct contrary evidence of Ms Lin and Ms Cui. Except to the extent that I have indicated otherwise above, I am satisfied that their evidence credibly reflected the true nature of their dealings with Glenvar and Mr Long.
Result and costs
[45] In the result, the plaintiffs' claims against both defendants fail in their entirety and I enter judgment for the defendants accordingly.
[46] The defendants are entitled to costs on a Category 2B basis and disbursements. If the parties cannot agree on the amounts to be paid, the defendants may apply by memorandum filed and served not later than 27 October 2017. The plaintiffs shall have until 17 November 2017 to file and serve any memorandum in reply. Costs shall then be dealt with on the papers unless the Court directs otherwise.
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Toogood J
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