Jeffreys v Coogan
[2018] NZHC 778
•23 April 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-002101
[2018] NZHC 778
BETWEEN STEPHANIE BETH JEFFREYS TIMOTHY WILSON DOWNES
PlaintiffsAND
WARREN GRAHAM COOGAN
First Defendant
AND
COLIN DAVID TUKE
Second Defendant
Hearing: 23 April 2018 Appearances:
J E M Lethbridge for the Plaintiffs
No appearance by or for the First Defendant No appearance by or for the Second Defendant
Judgment:
23 April 2018
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
This judgment was delivered by me on 23 April 2018 at 3:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:Lowndes Jordan, Auckland – [email protected] Carmine Law, Auckland – [email protected]
Lawes Law, Auckland – [email protected]
STEPHANIE BETH JEFFREYS & ANOR v WARREN GRAHAM COOGAN & ANOR [2018] NZHC 778 [23
April 2018]
Introduction
[1] This is an application for summary judgment. The plaintiffs, the liquidators of Gecko Construction Limited, contend that the defendants, both directors of the company, breached their directors’ duties by allowing the company to make advances to the first defendant at times when they knew that the company was insolvent. It is alleged that there was a breach of the procedures in s 52 of the Companies Act 1993.
[2]The plaintiffs seek judgment against the first defendant in the sum of
$506,046.17 together with interest at the rate of five percent per annum from 27 May 2015 to 23 April 2018.
[3] The first defendant has filed a notice of opposition, affidavit in support and a statement of defence. However, as recorded in the Minute of Edwards J of 22 November 2017, Mr Coogan has indicated that, whilst he still disputes the plaintiffs’ claim, he does not intend to take any further steps in the proceeding and abides the decision of the Court. In light of those instructions, his solicitors and counsel were excused from attending future hearings in respect of the application. There was no appearance by or on behalf of the first defendant at the hearing before me.
[4] By joint memorandum dated 20 April 2018 the plaintiff and the second defendant advised that they have reached a settlement. By consent the proceedings against the second defendant are adjourned until 15 June 2018 to enable the second defendant to comply with his settlement obligations.
[5] For reasons set out below I am satisfied that the plaintiffs have established that the first defendant has no defence to the claim and accordingly summary judgment should be entered against him.
Relevant legal principles
[6] The principles applicable to summary judgment applications are set out in the Court of Appeal decision Krukziener v Hanover Finance Ltd1:
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
The facts
[7] The defendants caused advances totalling $506,046.17 to be made to the first defendant personally, and at a time when he was a director of the company. There were no formal resolutions authorising the advances, all of which were made at a time when the company was not solvent. That was in clear breach of the requirements of s 52 of the Companies Act 1993. The company could not meet the solvency test at least since 31 March 2012. The company was insolvent from at least that date by which date it owed over $1,000,000 to the Inland Revenue Department.
[8] The first defendant provided a statutory declaration on 17 November 2015, witnessed by his solicitor, in which he declared that he owed an unsecured debt to the company of $506,046.17 for the “current account”.
[9] The amount of $506,046.17 was extracted by the plaintiffs from the Xero accounting package that the company used to prepare its accounts prior to the company being put into liquidation.
1 Krukziener v Hanover Finance Ltd (2008) 19 PRNZ 162.
[10] On 23 December 2016 the first defendant signed a deed of settlement in which he acknowledged the current account overpayment was the debt that was owing by both defendants:
Mr Coogan agrees that he and Mr Tuke are jointly and severally liable pursuant to the settlement agreement for a total amount of $523,210.15.
The notice of opposition by the first defendant
[11] In his notice of opposition and affidavit in support Mr Coogan raises concerns about the calculation of the current account debt and whether payments which were due to him for providing services for the company, and the treatment of personal expenses, were taken into account in the plaintiffs’ calculations. He says that he cannot substantively respond to the claims as set out in the statement of claim without discovery of all relevant documents by the plaintiffs, particularly the accounting records of the company.
Analysis and decision
[12] I am satisfied that there is no merit to Mr Coogan’s defence. He has formally acknowledged, at least two separate occasions, that he owed an unsecured debt to the company for the creditors’ account. His affidavit filed in opposition to the application for summary judgment is at best equivocal in relation to the amount that is owed.
[13] The evidence for the plaintiff is that a copy of the spreadsheet detailing the advances made to the first defendant was prepared prior to the liquidation by the company using Xero software and data from the company’s bank statements. Mr Coogan had this information available to him when he signed the statutory declaration on 17 November 2015.
[14] Mr Coogan says that he provided services to the company for which he was entitled to receive a salary. However, the draft accounts of the company show that salaries were separately itemised as were the matter of travel expenses. The equivocal evidence from Mr Coogan about whether or not these amounts were taken into account in reaching the current account figure, is contradicted by the contemporaneous documentary evidence of the company’s accounts at the time.
[15] In a summary judgment application it is clear that the Court need not accept uncritically evidence that is inherently lacking in credibility so for example where the evidence is inconsistent with undisputed, contemporary documents or other statements by the same deponent, or is inherently improbable. The evidence for the first defendant lacks credibility.
[16] The plaintiffs have established that the first defendant has no defence to the claim. The sum of $506,046.17 advanced by the company to the first defendant is repayable on demand and the first defendant has refused to pay. I therefore grant the summary judgment application.
Result
[17] Judgment is entered against the first defendant in favour of the plaintiff in the sum of $506,046.17 together with interest of $73,687.16. The interest is calculated at the rate of five percent per annum from 27 May 2015 to 23 April 2018 (being $69.32 per day).
[18] Costs are awarded to the plaintiff against the first defendant on a 2B basis together with disbursements fixed by the registrar.
[19] By consent, the application for summary judgment against the second defendant is adjourned until 15 June 2018.
Associate Judge P J Andrew
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