Levin v Titan Cranes Limited - [2013] NZHC 2628

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-2275 [2013] NZHC 2628

UNDER the Companies Act 1993

IN THE MATTER OF the liquidation of G T RIGGING LIMITED

BETWEEN HENRY DAVID LEVIN and VIVIEN JUDITH MADSEN-RIES
Applicants

ANDTITAN CRANES LIMITED Respondent

Hearing: 16 September 2013
(further submissions received 30 September 2013

Appearances: N H Malarao and K H Kuang for Applicants
D G Dewar and M Freeman for Respondent

Judgment: 10 October 2013

JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 10 October 2013 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.

...................................
Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland, for Applicants
Thomas Dewar Sziranyi Letts, Lower Hutt, for Respondent

LEVIN and MADSEN-RIES v TITAN CRANES LIMITED [2013] NZHC 2628 [10 October 2013]

[1] This is a voidable transaction case. The liquidators of G T Rigging Ltd (in liquidation) seek an order setting aside payments G T Rigging Ltd made to Titan Canes Ltd totalling $92,401.32 and an order for payment of that sum plus interest.

[2] As its name suggests, G T Rigging Ltd operated a rigging business which included the erection and dismantling of tower cranes and occasionally providing operators and dogmen for tower cranes. Titan Cranes Ltd operates mobile cranes. At the relevant times it had a branch in Auckland, but in 2009 the branch closed. Managerial staff that used to work in that branch has since dispersed. In late 2006 and early 2007 Titan provided cranage services to G T Rigging Ltd and issued these
invoices:

11 December 2006                 $ 9,202.50
11 December 2006                 $10,076.63
11 December 2006                 $31,595.63
12 January 2007  $23,872.50
31 January 2007  $20,171.25
Total:  $94,918.51

[3] On 27 February 2007 Titan issued a credit note to G T Rigging Ltd for

$2,517.19, reducing the total payable under these invoices to $92,401.32. Titan’s

terms of trade required payment on the 20th day following the date of its invoice.

[4] G T Rigging Ltd made these payments to Titan:

16 February 2007                  $25,000.00
6 March 2007  $10,000.00
3 May 2007  $5,000.00
22 June 2007  $26,410.66
31 July 2007  $25,990.66
Total:  $92,401.32

These are the payments which the liquidators wish to have set aside and repaid.

[5] On 12 April 2012 the liquidators served a notice under s 294 of the

Companies Act to set aside these payments. Titan gave a notice of objection on

30 April 2012. The liquidators began this proceeding on 2 May 2013.

The applicable law

[6] The Companies Amendment Act 2006 came into force on 1 November 2007.1

That Act significantly changed the voidable transaction provisions of the Companies Act 1993. The facts in this proceeding straddle those amendments coming into effect. The payments were made before the amendments came into force, but the company was ordered into liquidation, the liquidators gave their notice under s 294 and began this application afterwards. For this proceeding the inquiry is:

(a) Are the transactions voidable under the current version of s 292?

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.

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Details

Case: [2013] NZHC 2628
Decision Date: 10 October 2013

CaseChat Overview and Summary

This is a case about voidable transactions under the Companies Act 1993. The liquidators of G T Rigging Ltd sought an order setting aside payments G T Rigging Ltd made to Titan Cranes Ltd and an order for payment of that sum plus interest. Titan objected to the proceedings. The main issues were whether G T Rigging Ltd was able to pay its due debts when it paid Titan, whether the payments were made in the ordinary course of business, whether Titan had a defence under s 296(3) of the Companies Act, and whether the Court should exercise its discretion not to make any orders under s 295 on account of delay by the liquidators or other discretionary factors. The Court found that G T Rigging Ltd was not able to pay its due debts when it paid Titan. The payments of 16 February, 6 March and 3 May 2007 were made in the ordinary course of business and are not voidable. The payments of 22 June and 31 July 2007 were made under threat of liquidation proceedings and were not in the ordinary course of business. They are voidable. Titan had reasonable suspicion of insolvency when it received those payments. It did not alter its position in reliance on those payments. Titan has not made out its defence under s 296(3) of the Companies Act. The liquidators' application is not statute-barred. While there was delay by the liquidators, that goes only to the award of interest, but is not a ground to deny relief entirely. The Court made orders setting aside the payments of 22 June 2007 ($26,410.66) and 31 July 2007 ($25,990.66). It ordered Titan Cranes Ltd to pay the liquidators the sums of $26,410.66 and $25,990.66, a total of $52,401.32. It ordered Titan Cranes Ltd to pay the liquidators interest on $52,401.32 at five per cent per annum for a period of two years six months. It awarded the liquidators costs on a category 2 basis.

Orders