Levin v Nel

[2016] NZHC 1603

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2015-404-895 [2016] NZHC 1603

BETWEEN

HENRY DAVID LEVIN AND

VIVIENNE JUDITH MADSEN-RIES AS LIQUIDATORS OF TE PUA ROAD DEVELOPMENT LIMITED (IN LIQUIDATION)

Plaintiffs

AND

PIETER SCHALK NEL, ELIZABETH MARIA NEL AND MICHAEL JOHN BONDESIO AS TRUSTEES OF THE PIETER AND ELIZABETH NEL FAMILY TRUST

Defendants

Hearing:	15 July 2016
Counsel:	P Shackleton and C Eason for Plaintiffs J Strauss for Defendants
Judgment:	15 July 2016

(ORAL) JUDGMENT OF HEATH J

Solicitors:

Meredith Connell, Auckland North Harbour Law, Auckland Counsel:

J Strauss, Auckland

HENRY DAVID LEVIN AND VIVIENNE JUDITH MADSEN-RIES AS LIQUIDATORS OF TE PUA ROAD DEVELOPMENT LIMITED (IN LIQUIDATION) v NEL [2016] NZHC 1603 [15 July 2016]

[1]      The liquidators of Te Pua Road Developments  Ltd  (in liquidation) bring proceedings against the trustees of the Pieter and Elizabeth Nel Family Trust (the trustees) on the grounds that they received two payments from the company which should be characterised either as insolvent transactions or transactions at an under- value, contrary to ss 292 and 297 of the Companies Act 1993 respectively.

[2]      The liquidators seek leave to file and serve a second amended statement of claim. The application was filed on 27 June 2016.

[3]      The trial is set down for hearing over four days, commencing on 25 July

2016.   The liquidators wish to add an additional (but alternative) cause of action based on s 348 of the Property Law Act 2007.  That provision entitles the Court in specified circumstances to set aside certain dispositions of property.   The Court’s jurisdiction under s 348 is co-existent with that conferred by the Companies Act provisions on which the liquidators rely.

[4]      Initially, the application was opposed.   The concern was that there may be evidential issues arising in relation to the new cause of action and it would be too late to brief that evidence in anticipation of trial.   In that respect, I note that the proceeding was first filed on 23 April 2015.

[5]      The liquidators submit that they should be allowed to make the amendment because the approach of the Court to the “change of position” defences under the various provisions in issue may differ, depending upon whether the Companies Act or Property Law Act applies.

[6]      Mr Shackelton, for the liquidators, has referred me to a decision of the Court of Appeal in McIntosh v Fisk,1 in which a majority of the Court commented on this issue.   Delivering the judgment of himself and French J, Harrison J pointed to argument advanced by counsel for the liquidators in that case in which a “key

difference” between the two alternative of position defences was identified as being

1      McIntosh v Fisk [2015] NZCA 74.

“that the [Property Law Act] defence is discretionary while the Companies Act

defence is mandatory”.2   Harrison J continued:3

The practical consequence would be that if the Court found Mr McIntosh had  materially  altered  his  position  it  could  still   order  him  to  pay compensation under the [Property Law Act] if such an order were not unjust but could not make an order under s 295 of the Companies Act.

[7]      The point does not appear to have been determined in McIntosh v Fisk, and I do not believe any reference was made to it in the dissenting judgment as to the cross appeal delivered by Miller J. The issue remains open.

[8]      Mr  Shackleton  also  raises  a  second  reason;  namely,  a  claim  under  the Property Law Act may not require a debtor/creditor relationship before it could be brought.

[9]      I think it is likely that no additional evidence would be required to meet the amended claim, as the various statutory provisions address a similar fundamental issue.  However, there may, as Mr Strauss, for the trustees submitted, be a possibility that final preparation for trial may identify an area on which evidence would be required.

[10]     I propose to deal with that contingency through a condition being imposed in relation to any adjournment which may need to be granted by a trial Judge solely on the grounds that the trustees were prejudiced in putting forward a defence to the new cause of action through an inability to garner evidence in advance of trial.

[11]     Given the legal nature of the issue and the condition that can be imposed, I grant leave to the liquidators to file and serve an amended statement of claim incorporating the third proposed cause of action as set out in the draft dated 27 June

2016 supporting the current application.  No formal pleading in response is required. The Court can assume that the allegations set out in the new cause of action are denied,  except  to  the extent  that pleadings  in  respect  of other causes  of action

necessarily carry with it admissions of particular factual assertions.

2 Ibid, at para [59].

3      Ibid.

[12]     Leave is granted on the condition that, if the trial Judge was persuaded to adjourn the trial for reasons of evidential prejudice caused by the late amendment, the liquidators shall meet any costs order caused by that adjournment.   For the avoidance of doubt, I make it clear that if an adjournment were sought during trial for dual reasons, or based on some other ground, that condition does not attach to any adjournment application.  That would need to be determined on its merits by the trial Judge, along with associated questions of costs.

[13]     So far as the present application is concerned, questions of costs are reserved. They shall be dealt with by the trial Judge as part of his or her determination of the

substantive claim.

P R Heath J