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Levin v Ikiua

Levin v Ikiua

Case [2010] NZCA 509 12 November 2010

Corporate Law & Governance

Contract Law

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA508/2009

[2010] NZCA 509
BETWEENHENRY DAVID LEVIN AND BARRY PHILIP JORDAN
Appellants

ANDPATRICK IKIUA
First Respondent
ANDKENETI APA
Second Respondent
ANDTESSA APA
Third Respondent
ANDMARK CROSBIE
Fourth Respondent
ANDANDREW DAVID SMITH
Fifth Respondent

CA29/2010
AND BETWEEN PATRICK IKIUA
First Appellant
ANDKENETI APA
Second Appellant
ANDTESSA APA
Third Appellant
ANDMARK CROSBIE
Fourth Appellant
ANDANDREW DAVID SMITH
Fifth Appellant

ANDHENRY DAVID LEVIN AND BARRY PHILIP JORDAN
Respondents

Hearing:7 and 8 September 2010

Court:Hammond, Ellen France and Panckhurst JJ
Counsel:F M R Cooke QC and G A D Neil for Appellants (CA 508/2009) and Respondents (CA 29/2010)
C T Walker for Respondents (CA 508/2009) and Appellants (CA 29/2010)

Judgment:12 November 2010 at 10 am

JUDGMENT OF THE COURT

AThe liquidators’ appeal in CA508/2009 is dismissed.
BThe cross-appeal in CA29/2010 is dismissed save that:
(a)we find it unnecessary to determine the appeal against the finding of an issue estoppel, and
(b)a decision in relation to the High Court costs judgment is reserved.

CCosts in this Court shall be considered in the outstanding costs decision in the cross-appeal.

____________________________________________________________________
REASONS OF THE COURT
(Given by Panckhurst J)
Table of Contents
Para No
Introduction  [1]
The relevant history  [4]
Trust distributions  [16]
Was the business undertaking of OPC settled on the OPC Trust?
     The Judge’s finding  [19]
     The arguments in relation to the settlement  [21]
     Evaluation: did OPC declare itself trustee of its business
     undertaking for the benefit of OPC Trust?  [28]
     Evaluation: was the ACC agreement able to be settled?  [32]
     Conclusions  [39]
The s 298(2) claim
     The statutory provision  [47]
     Heath J’s decision on this cause of action  [50]
     The argument for the liquidators  [51]
     Evaluation: does s 298(2) catch these dispositions?  [53]
The claim based on breach of directors’ duties
     The basis of the claim  [55]
     Heath J’s decision on these causes of action  [57]
     The arguments for the liquidators  [59]
     Evaluation: were the directors in breach of their
     statutory or fiduciary duties?  [62]
The cross appeal as to the directors’ liability to pay $8,000.80
     Heath J’s finding  [70]
     Evaluation  [73]
The ACC debt: issue estoppel  [74]
     The statutory demand proceeding  [75]

The Judge’s finding  [79]
     The respective arguments  [85]
     Evaluation  [89]
The costs decision  [96]
Result  [99]
Introduction
[1]       The first named appellants are the liquidators of OPC Managed Rehab Limited (OPC). Throughout the period relevant to this case OPC operated as the corporate trustee of the OPC Managed Rehab Trust (the OPC Trust). The business of OPC comprised the provision of case management services to the Accident Compensation Corporation (ACC). Following the liquidation of OPC proofs of debt were filed by ACC based on alleged overpayments made in relation to the provision of case management services.
[2]       Subsequently the liquidators filed this proceeding in the High Court. They challenged the actions of Messrs Ikiua and Apa, the first and second respondents, as directors of OPC in distributing all profits derived by 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.

Continue reading Levin v Ikiua

Details

AGLC: Levin v Ikiua [2010] NZCA 509
Case: [2010] NZCA 509
Decision Date: 12 November 2010

CaseChat Overview and Summary

Levin v Ikiua is a Court of Appeal decision which considered the validity of a settlement of a business undertaking of a corporate trustee company upon a trust. The Court of Appeal found that the directors of the company had declared a trust of the business undertaking, even though they had not followed the legal advice they had received. The Court of Appeal also found that the directors had not breached their statutory or fiduciary duties when they distributed trading profits to beneficiaries of the trust. The liquidators were only successful in recovering a small sum from the directors for payments made after the directors had notice of a claim for overpayments made by the company. The liquidators were unsuccessful in all other respects.

Orders