Graham v Tyler - [2019] NZHC 430

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000162

[2019] NZHC 430

UNDER the Property Law Act 2007 and the Companies Act 1993

AND

in the matter of Arena Capital Ltd (in liq)

BETWEEN

GRANT ROBERT GRAHAM and NEALE

JACKSON as liquidators of Arena Capital Ltd (in liq)
Plaintiffs

AND

JOHN EMRYS TYLER

First Defendant

AND

CHIPMUNK ONE LTD

Second Defendant

Hearing: (By formal proof on the papers)

Appearances:

T G H Smith and S M Cathro for Plaintiffs

Judgment:

13 March 2019

JUDGMENT OF OSBORNE J

on formal proof

[1] This proceeding is brought by the liquidators (the liquidators) of Arena Capital Ltd (in liq) (Arena). They seek from the first defendant, John Emrys Tyler, and his company, Chipmunk One Ltd (Chipmunk) sums of money which were paid to the defendants and which the liquidators assert to be recoverable under either the Property Law Act 2007 or the Companies Act 1993 or both.

[2] Arena, also known as Blackfort FX, was used by Lance Ryan and Jimmie McNicholl as the vehicle for a Ponzi scheme. Arena began operating in May 2014

GRAHAM & JACKSON v TYLER & ANOR [2019] NZHC 430 [13 March 2019]

and operated as a pure Ponzi scheme.1 The liquidators were initially appointed by this Court as receivers and managers of Arena on 27 May 2015 and were subsequently appointed Arena’s liquidators.

[3] Messrs Ryan and McNicholl were subsequently convicted of dishonesty offences in a prosecution brought by the Serious Fraud Office. The liquidators’ case is that Arena was insolvent from very shortly after it began operating and certainly no later than 3 June 2014.

[4] Arena purported to open an account for Mr Tyler in June 2014 and an account for Chipmunk in July 2014.

[5]The liquidators’ evidence establishes that:

(a)Mr Tyler made no payments to Arena;

(b)Between 10 July 2014 and 4 May 2015, Chipmunk paid Arena
$119,430;

(c)Between 9 October 2014 and 10 April 2015, Arena paid Mr Tyler
$317,500 (by payment into his bank account); and

(d)Between 23 January 2015 and 7 May 2015, Arena paid Chipmunk
$259,000 (by payment into its bank account).

[6] The liquidators seek judgment against Mr Tyler for $317,500 (together with interest) and against Chipmunk for $259,000 (together with interest).

This proceeding

[7] The liquidators bring this proceeding by leave under Part 18 of the High Court Rules.

1 See Graham v Arena Capital Ltd (in liq) [2017] NZHC 973.

[8] They now proceed to formally prove their case, neither defendant having filed a defence.2

[9] The liquidators rely on the affidavit evidence of the second-named plaintiff, Mr Jackson. For reasons I will come to, I am satisfied in terms of r 15.9(4) High Court Rules that each of the plaintiffs’ causes of action are established and that sufficient information has been provided to enable me to calculate and fix the judgment sums.

[10] The liquidators’ causes of action may conveniently be discussed under the Property Law…

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 Graham v Tyler

Details

AGLC: Graham v Tyler [2019] NZHC 430
Case: [2019] NZHC 430
Decision Date: 13 March 2019

CaseChat Overview and Summary

In the High Court of New Zealand, Christchurch Registry, the liquidators of Arena Capital Ltd, Grant Robert Graham and Neale Jackson, sought to recover funds paid to John Emrys Tyler and Chipmunk One Ltd, alleging they were recoverable under the Property Law Act 2007 or the Companies Act 1993. The defendants did not file a defence, and the court proceeded to formally prove the liquidators' case. The primary legal issues involved whether the payments made by Arena to the defendants constituted prejudicial dispositions under the Property Law Act and if Arena was insolvent at the time of the payments. The court found that Arena was indeed a debtor and insolvent at the time of the payments, which were made with the intent to defeat creditors' claims, thus qualifying as prejudicial dispositions. The court concluded that the liquidators were entitled to recover $317,500 from Tyler and $259,000 from Chipmunk, along with interest from the date of liquidation until payment. The court further ordered that Tyler and Chipmunk jointly and severally pay the costs of the proceeding.

The court granted the liquidators' claim for the recovery of funds, setting aside the payments made to the defendants as prejudicial dispositions under the Property Law Act. The court ordered John Emrys Tyler to pay $317,500 plus interest of $42,089.11 to Arena Capital Ltd (in liq). Chipmunk One Ltd was ordered to pay $259,000 plus interest of $34,334.11 to Arena Capital Ltd (in liq). Additionally, both defendants were directed to jointly and severally pay the costs of the proceeding, which were fixed at $20,739, along with disbursements to be determined by the Registrar. The court based its decision on the evidence provided by the liquidators and the applicable provisions of the Property Law Act and Companies Act.

Orders