Levin v West City Construction Ltd - [2013] NZHC 929

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2012-404-002891 [2013] NZHC 929

UNDER the Companies Act 1993

IN THE MATTER OF the Liquidation of St George Developments
Limited

BETWEEN HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF ST GEORGE DEVELOPMENTS LIMITED (IN LIQUIDATION)
Applicants

ANDWEST CITY CONSTRUCTION LIMITED Respondent

Hearing: 4 October 2012 and 9 October 2012

Counsel: N H Malarao for applicants
P J Davey for respondent

Judgment: 1 May 2013

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 1 May 2013 at 12.45pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
N H Malarao, Meredith Connell, PO Box 2213, Auckland 1140
Christopher Taylor Lawyers, PO Box 37,772 Parnell, Auckland

Counsel:
P J Davey, PO Box 1811, Shortland Street, Auckland 1140

HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF ST GEORGE DEVELOPMENTS LIMITED (IN LIQUIDATION) V WEST CITY CONSTRUCTION LIMITED HC AK CIV
2012-404-002891 [1 May 2013]

[1] The liquidators of St George Developments Ltd (St George) apply for an order setting aside the assignment to the respondent, West City Construction Ltd of a cash bond issued to St George by North Shore City Council $104,350. The bond provided for repayment of money held by North Shore City Council to ensure compliance with work required by the Council to complete a residential subdivision being undertaken by St George. West City was the head contractor in the development.

[2] The liquidators say that the assignment is voidable because it occurred within two years of the liquidation of St George, at a time when St George was unable to pay its due debts, and it enabled West City to receive more in satisfaction of debt owed to it by St George than it would have received in the liquidation.

[3] West City says that the assignment took place outside the two year period before liquidation and so was not an insolvent transaction. It also says the assignment should not be set aside as it was made in the ordinary course of business and, in any event, recovery should be denied as West City received the bond in good faith, there was no reason for it to suspect St George was or would become insolvent, and it altered its position in the reasonable belief that the assignment was validly made.

Background

[4] St George traded as a property developer. Between 2002 and 2006 it was the developer of a residential subdivision at Quail Drive, Albany.

[5] West City (which has since changed its name to Ireland Holdings Ltd)1 tendered successfully for the construction work for the development, and was appointed head contractor.2 The contract between St George and West City allowed
St George to retain agreed percentages of the value of the of contract works pending

1 It did so ahead of incorporation of a new company on 22 September 2006 which was then named West City Construction Ltd, and became the trading company. This restructuring is not…

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.

Keep reading for free

Create a free CaseChat account to read Levin v West City Construction Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2013] NZHC 929
Decision Date: 1 May 2013

CaseChat Overview and Summary

The liquidators of St George Developments Limited sought to set aside an assignment of a cash bond held by North Shore City Council by West City Construction Limited, the head contractor for a residential subdivision at Quail Drive, Albany. West City Construction Limited contended that the assignment was valid as it had occurred outside the two-year period prior to the liquidation of St George Developments Limited. The liquidators argued that the assignment occurred within the two-year period and was not in the ordinary course of business. They further contended that West City Construction Limited did not have a defence under s 296(3) of the Companies Act 1993. The Court found that the liquidators had not established that there was a voidable transaction, and their application was dismissed. The Court held that there was not sufficient evidence to establish an agreement to assign the bond in November 2005, as the liquidators had contended. It also found that the assignment was not in the ordinary course of business, and that West City Construction Limited could not establish the grounds for a defence under s 296(3) of the Companies Act 1993. The Court further found that it would not be unfair to make an order for West City Construction Limited to repay the bond, as the arguments for delay did not operate to prevent the liquidators from recovering the bond. West City Construction Limited was entitled to its costs on a scale 2B basis, together with disbursements as fixed by the Registrar.

Orders