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Lookman v Design Electronics Ltd

Lookman v Design Electronics Ltd

Case [2018] NZHC 904 2 May 2018

Corporate Law & Governance

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PARAGRAPH [15] OF THE JUDGMENT OF THE COURT DATED 2 MAY 2018 WILL NOT BE PUBLISHED UNTIL FURTHER ORDER OF THE COURT.

PURSUANT TO r 5(2) OF THE SENIOR COURTS (ACCESS TO COURT DOCUMENTS) RULES 2017 NO PERSON SHALL HAVE ACCESS TO ANY AFFIDAVIT FILED ON THIS PROCEEDING UP TO THIS POINT [15 MAY 2018], NOR THE MEMORANDUM OF COUNSEL FOR THE PLAINTIFF DATED 15 MARCH 2018, WITHOUT THE PERMISSION OF A JUDGE.

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2018-442-000006

[2018] NZHC 904

BETWEEN
MICHAEL ANDREW LOOKMAN and 187 BRIDGE TRUSTEES 53 LIMITED as

Trustees of the LOOKMAN FAMILY TRUST

Plaintiffs

AND

DESIGN ELECTRONICS LIMITED

Defendant

Hearing: 23 April 2018

Appearances:

G M Downing for Plaintiffs S J Jamieson for Defendant

Judgment:

2 May 2018

Reissued:

15 May 2018

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS [REDACTED]

[Note: Suppression orders above - paragraph [15] redacted]

LOOKMAN & 187 BRIDGE TRUSTEES 53 LTD as Trustees of the LOOKMAN FAMILY TRUST v DESIGN ELECTRONICS LTD [2018] NZHC 904 [2 May 2018]

[1] In this proceeding the plaintiffs, the Lookman trustees, apply for an order placing the defendant, Design Electronics Ltd (Design Electronics) into liquidation. Design Electronics is a start-up technology company which specialises in long-range, low-powered, sensing and measuring devices. The Lookman trustees advanced money to Design Electronics and have demanded its repayment by a notice under s 289 of the Companies Act 1993. Design Electronics has not paid the monies demanded. It says they are not due.

[2] On 8 March 2018 the Lookman trustees applied for appointment of an interim liquidator. That application was considered by Dunningham J but has not been set down for argument. It remains extant.

[3] The Lookman trustees also applied for an order under r 31.11 of the High Court Rules 2016 restraining advertising. That application was made without notice. After considering it on the papers the Court made an order restraining advertising of the application for appointment of liquidators until further order of the Court. Reasons for the judgment were issued after the order was made, because it was necessary for the order to be considered urgently, and when those reasons were issued the Court also directed service of the application documents. This was duly attended to. There are now two applications before the Court. The first is by Design Electronics for an order staying this proceeding pending determination of a dispute between the Lookman trustees and Design Electronics in relation to whether the sum the Lookman trustees claim to be due and owing is in fact a debt repayable by Design Electronics on demand. The second (albeit brought by way of memorandum) is by the Lookman trustees for an order setting aside the stay which is already in place.

[4] The Court retains an inherent jurisdiction to stay a winding-up proceeding. It has been described in the following terms:1

But the right to have a winding-up petition determined, being a right conferred by statute,…

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 Lookman v Design Electronics Ltd

Details

AGLC: Lookman v Design Electronics Ltd [2018] NZHC 904
Case: [2018] NZHC 904
Decision Date: 2 May 2018

CaseChat Overview and Summary

The plaintiffs, Michael Andrew Lookman and 187 Bridge Trustees 53 Limited as Trustees of the Lookman Family Trust, sought an order placing the defendant, Design Electronics Ltd, into liquidation. The Lookman trustees had advanced money to Design Electronics, which specialised in long-range, low-powered, sensing and measuring devices, but Design Electronics refused to repay the sum claimed. Design Electronics argued that the Lookman trustees did not have status as a petitioning creditor because there was a substantial dispute over whether the debt was due. The Court considered whether the agreement between the parties provided for repayment of the advances on demand and found that the agreement did not expressly provide for repayment to be made upon demand, nor did it state a circumstance when repayment would be made. The Court found that Design Electronics had established an arguable case that the advances made by the Lookman trustees were not repayable upon demand.

The Court held that it retains an inherent jurisdiction to stay a winding-up proceeding, but the right to have a winding-up petition determined, being a right conferred by statute, ought not to be taken away except where the existence of that very statutory right itself is seriously challenged. To avoid liquidation, therefore, it was necessary for Design Electronics to show that the Lookman trustees did not have status as a petitioning creditor. The Court found that Design Electronics had established an arguable case that the advances made by the Lookman trustees were not repayable upon demand, and the balance of convenience favoured Design Electronics. The Court stayed the present proceeding for the liquidation of Design Electronics and set aside the stay of advertising as being of no further effect. The Lookman trustees were ordered to pay costs to Design Electronics on this application, and costs on the earlier application for a stay of advertising and separate applications to the Court for appointment of interim liquidators were reserved.

Orders