Grant v Rosebud Corporate Trustee Limited - [2014] NZHC 2789

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004578 [2014] NZHC 2789

BETWEEN
DAMIEN GRANT and STEVEN KHOV

as liquidators of HUNTER CAPITAL LIMITED (IN LIQUIDATION) Plaintiffs

AND

ROSEBUD CORPORATE TRUSTEE LIMITED

Defendant

Hearing: 10 November 2014

Appearances:

B J Norling and J K Boparoy for Plaintiffs

Judgment:

10 November 2014

ORAL JUDGMENT OF VENNING J

Solicitors: Waterstone Insolvency, Auckland

GRANT and KHOV v ROSEBUD CORPORATE TRUSTEE LTD [2014] NZHC 2789 [10 November 2014]

[1] In these proceedings the liquidators of Hunter Capital Limited (Hunter Capital) seek to recover against Rosebud Corporate Trustee Limited (Rosebud), sums totalling $125,000 being payments made by Hunter Capital to Rosebud between 20 May 2011 and 3 February 2012.

[2] The proceedings are pursued by the liquidators of Hunter Capital against

Rosebud. The proceedings were actively defended until as recently as 31 October

2014 when Rosebud was put into liquidation by this Court. The liquidators of Hunter Capital were also appointed as liquidators of Rosebud. As liquidators of Rosebud they do not oppose this proceeding continuing.

[3] Although there is no longer an active defence or appearance in opposition to the liquidators of Hunter Capital’s claim the matter has proceeded by way of formal proof this morning. It is for the liquidators to satisfy the Court that judgment should be entered against Rosebud accordingly.

[4] I start with the statement of claim. Essentially Hunter Capital alleges that it participated in the development of a number of properties in Albany. There were a number of individuals in the role of directors or managers of the companies involved in the project, including, importantly for present purposes, Messes Nielsen, Chevin, Bublitz and Cook. A company was established in Singapore trading as Raine and Horne. That company sought investment from members of the public. A number of investors made investments which were ultimately transferred through law firms to either Hunter Gills Road Limited or Albany Heights Villas Limited.

[5] Some of the investors’ funds were then transferred to Hunter Capital from Hunter Gills Road Limited and Albany Heights Villas Limited and ultimately some of the funds, namely the $125,000 referred to, were transferred to Rosebud. The liquidators of Hunter Capital say the funds were transferred for no consideration. The funds were effectively used for the purposes and benefit of Mr Nielsen’s wife, Ms Sirene Nielsen.

[6] The plaintiff liquidators raise three causes of action:

(a) first, transactions at an undervalue: s 297 of the Companies Act 1993 (the Act);

(b) second, unjust enrichment; and

(c) third, money had and received.

[7] I address the first cause of action. To make out the claim under s 297 of the

Act in this case the liquidators must establish that:

(a) Rosebud received a transaction from Hunter Capital; and

(b) Rosebud provided no value to Hunter Capital for that transaction; and

(c) the transactions were entered into within two years prior to the liquidation of Hunter Capital; and

(d)Hunter Capital was unable to pay its due debts when it entered the…

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.

Keep reading for free

Create a free CaseChat account to read Grant v Rosebud Corporate Trustee Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2014] NZHC 2789
Decision Date: 10 November 2014

CaseChat Overview and Summary

The High Court of New Zealand heard a case between the liquidators of Hunter Capital Limited, Damien Grant and Steven Khov, and Rosebud Corporate Trustee Limited. The liquidators sought to recover sums amounting to $125,000 that Hunter Capital had paid to Rosebud between 20 May 2011 and 3 February 2012. The primary legal issues involved whether the payments were transactions at an undervalue, as per section 297 of the Companies Act 1993, whether Rosebud was unjustly enriched, and whether Rosebud could be held liable for money had and received. The liquidators argued that the payments were made without any consideration, and that Hunter Capital was unable to pay its debts at the time of the transactions.

The Court examined the nature of the transactions and the financial status of Hunter Capital. Evidence showed that Hunter Capital had made payments to Rosebud, which were not supported by any services or value received. The liquidators demonstrated that Hunter Capital was insolvent and unable to meet its debts at the time of the payments, based on detailed financial records and analysis. Rosebud admitted receiving the payments but failed to provide evidence of any value received or that it acted in good faith. The Court concluded that Hunter Capital was indeed insolvent and that Rosebud provided no value for the transactions. Therefore, the claim under section 297 of the Companies Act 1993 was upheld, making Rosebud liable for the $125,000. The Court ordered Rosebud to pay the amount together with costs on a 2B basis and disbursements as fixed by the Registrar.

This decision reinforces the importance of proper corporate governance and financial transparency, particularly in real estate development ventures. It highlights the legal consequences of transferring funds without adequate consideration and the responsibilities of trustees and corporate entities in ensuring the integrity of financial transactions.

Orders