Grant v Citywide Electrical Limited - [2025] NZHC 2641

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000378

[2025] NZHC 2641

BETWEEN
DAMIEN GRANT and ADAM

BOTTERILL as liquidators of Tempest Air Conditioning Systems Limited (in

liquidation) Applicants

AND

CITYWIDE ELECTRICAL LIMITED

Respondent

Hearing: 25 August 2025

Appearances:

B D Gustafson / B McLeish for the Applicants D G Collecutt for the Respondent

Judgment:

16 September 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 16 September 2025 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Olive Law, Auckland Waterstone, Auckland

D G Collecutt, Auckland

GRANT v CITYWIDE ELECTRICAL LTD [2025] NZHC 2641 [16 September 2025]

Introduction

[1] Tempest Air Conditioning Systems Ltd (in liquidation) (Tempest) was insolvent. By April 2022, Tempest’s sole director and majority shareholder, Mr Coulam, was considering liquidation.

[2] Although not a director of Citywide Electrical Ltd (Citywide), Mr Coulam was also managing Citywide’s business. Citywide was owed a significant amount from Tempest. The debt was several months old.

[3] One working day before liquidation, Tempest made a number of payments from its substantially overdrawn bank account in favour of a number of creditors, including Citywide.

[4] On 29 April 2022, Citywide received the sum of $122,020.76 from Tempest (the Transaction).

[5] On 2 May 2022, Tempest was placed into liquidation by special resolution of its shareholders. Messrs Grant and Botterill were appointed liquidators.

[6] On the same day, Tempest’s business was sold to RCR Infrastructure Ltd (RCR).

[7] The liquidators apply to set the Transaction aside as voidable under ss 292, 294 and 295 of the Companies Act 1993 (the Act), and seek an order for repayment of that sum from Citywide, together with interest and costs.

[8]The application is opposed.

[9]The following is not in dispute:

(a)the Transaction was made within the restricted period defined by s 292(4C) of the Act;

(b)the Transaction occurred when Tempest was unable to pay its due debts; and

(c)The Transaction enabled Citywide to receive more towards the satisfaction of its debt than it would have been likely to receive in Tempest’s liquidation.

What was Tempest’s financial position in April 2022?

[10]The concession that Tempest was insolvent is appropriate.

[11] The second liquidators’ report paints the picture of Tempest’s position as follows:

Assets

(a)fixed assets — $295,000;

(b)inventory — $20,000;

Liabilities

(c)preferential creditors:

(i)employee claims — $126,508.88;

(ii)Inland Revenue (preferential) — $219,569.63;

(d)secured creditors:

(i) GSA Holder (BNZ) — $323,106.06;

(ii) other secured creditors — unknown, but previously estimated at
$170,108.13;

(e)unsecured creditors — $1,212,023.12.

[12] The creditors’ ageing summary, calculated as at the end of April 2022 and provided by the liquidators in evidence, shows that Tempest had significant and increasing unpaid debt as follows:

Current Last month Two months Three months Balance

$231,889.97

$381,613.14

$431,898.06

$384,777.93

$1,430,179.10

[13] Focusing on Citywide, its position (after receipt of the Transaction) was as follows:

Current Last month Two months

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.

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Details

Case: [2025] NZHC 2641
Decision Date: 16 September 2025

CaseChat Overview and Summary

The High Court of New Zealand considered an application by the liquidators of Tempest Air Conditioning Systems Limited (Tempest) to set aside a payment made by Tempest to Citywide Electrical Limited (Citywide) prior to its liquidation. The liquidators sought to recover the amount paid, claiming it was a voidable transaction under the Companies Act 1993. Citywide opposed the application on two grounds: first, that the transaction formed part of a continuing business relationship protected by statute, and second, that an agreement existed with one of the liquidators that the payment would not be challenged. The court dismissed both grounds of opposition. It held that the transaction did not form part of a continuing business relationship as it was a payment of old debt made with the knowledge that Tempest's business was about to cease. The court also found that any agreement with the liquidator not to challenge the payment was unenforceable as it would have required the liquidator to act contrary to the statutory duties imposed on them. The court ordered Citywide to repay the amount received, with interest, to the liquidators and awarded costs to the applicants.

Orders