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Levin v Market Square Trust

Levin v Market Square Trust

Case [2007] NZCA 135 18 April 2007

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA224/05
[2007] NZCA 135
BETWEENHENRY DAVID LEVIN AS LIQUIDATOR OF ONE ITALY LIMITED (IN LIQUIDATION)

Appellant

ANDMARKET SQUARE TRUST

Respondent

Hearing:24 August 2006

Court:Chambers, Randerson and John Hansen JJ
Counsel:S E Cameron for Appellant

S W Greer and B M K Pamatatau for Respondent

Judgment:18 April 2007 at 4 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
B        The payment of $35,768.74 made to the respondent on 29 March 2004 and referred to in the appellant’s notice dated 25 November 2004 is set aside under s 294 of the Companies Act 1993.
C        The respondent must pay to the appellant the sum of $35,768.74 under s 295 of the Companies Act 1993.
D        The costs order made in the High Court in the respondent’s favour is set aside.
E        The appellant is entitled to costs with respect to the High Court proceeding. If the parties cannot agree those costs, application should be made to the High Court for that court to determine quantum.
F        With respect to costs in this court, the respondent must pay to the appellant $5,000, plus usual disbursements.

REASONS OF THE COURT
(Given by Chambers J)
A voidable preference claim
[1]       One Italy Limited, a company now in liquidation, leased business premises from Market Square Trust. It was frequently behind with the rent. On 19 February 2004, the trust made demand for immediate payment of the rent arrears and threatened re-entry if One Italy did not pay.
[2]       One Italy did not pay, but four days later advised the trust that it had entered into an agreement to sell its business to a company called Peek Developments Limited.   The purchase price was $239,000. Under the agreement Peek paid One Italy a deposit of $70,000. The agreement was conditional: one of the conditions was the trust’s consent to the assignment of the lease.
[3]       The trust advised Peek that its consent was conditional on One Italy paying the arrears and undertaking certain repairs on the premises. Subsequently the trust softened its stance. On 29 March 2004, Paresh Ganda, the trust’s solicitor, advised McVeagh Fleming, Peek’s solicitors, that the trust would consent to the assignment provided arrears of $35,768.74 were paid that day. McVeagh Fleming, on behalf of their client, direct credited the trust that day. We shall explain later in these reasons the circumstances under which Peek came to make the payment of what was One Italy’s debt.
[4]       For reasons which have not been explained, the sale of One Italy’s business to Peek did not proceed.
[5]       One Italy was placed into liquidation by the High Court on 17 June 2004. Later, One Italy’s liquidator, Henry Levin, the appellant, served on the trust a notice under s 294 of the Companies Act 1993. He claimed the payment to the trust by Peek’s solicitors was a voidable transaction by One Italy in terms of s 292 of…

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 Market Square Trust

Details

AGLC: Levin v Market Square Trust [2007] NZCA 135
Case: [2007] NZCA 135
Decision Date: 18 April 2007

CaseChat Overview and Summary

In Levin v Market Square Trust, the liquidator of One Italy Limited, a company in liquidation, sought to recover a payment made by Peek Developments Limited to the respondent, Market Square Trust. The trust had leased business premises to One Italy, which was frequently late with rent payments. On 29 March 2004, Peek, acting on behalf of One Italy, paid the trust the outstanding rent. The liquidator claimed this payment was a voidable transaction under the Companies Act 1993. The central issues were whether the payment was by One Italy, whether One Italy was insolvent at the time of payment, whether the payment resulted in a preference, and whether the trust received the money in good faith. The Court of Appeal found the payment was indeed by One Italy, that One Italy was insolvent, that the payment resulted in a preference, and that the trust did not receive the money in good faith. Consequently, the trust was ordered to repay the sum to the liquidator. The appeal was allowed, and the trust was set to repay the sum of $35,768.74, plus costs.

Orders