IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-000103 [2015] NZHC 538
UNDER
The Companies Act 1993
IN THE MATTER
of Petranz Limited (in liquidation)
BETWEEN
VIVIEN JUDITH MADSEN-RIES and DAVID STUART VANCE as liquidators of Petranz Limited (in liquidation)
First Plaintiffs
PETRANZ LIMITED (in liquidation) Second Plaintiff
AND
DARRELL WARREN KARANEIHANA PETERA
First Defendant
DIANA JOY PETERA Second Defendant
Hearing:
9-12 March 2015
Appearances:
N H Malarao and K Wakelin for plaintiffs Defendants in person
Judgment:
24 March 2015
JUDGMENT OF LANG J
This judgment was delivered by me on 24 March 2015 at 1.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
MADSEN-RIES and VANCE v PETERA [2015] NZHC 538 [24 March 2015]
INDEX
The company’s indebtedness
[4]
The debt owing to the Commissioner
[7]
Income Tax
[8]
Child Support
[10]
PAYE
[11]
Goods and services tax
[13]
When did the company become insolvent?
[14]
Recovery of monies drawn or paid from the company’s bank
accounts
[18]
Funds taken for miscellaneous personal expenses $2558.36
[20]
Funds withdrawn via teller or cheque withdrawals
[25]
Funds taken via ATM withdrawals
[27]
Funds transferred to pay mortgage
[29]
Transfers of funds to Mrs Petera’s personal bank account
[30]
Transfers of funds to Mr and Mrs Petera’s joint personal account
[34]
Other reasons for rejection of the argument that the payments
represent the payment of wages or salary
[36]
Summary
Mrs Petera
Mr and Mrs Petera jointly
[46]
Recovery of wages or salaries that were declared for taxation purposes
[48]
Breach of duties under the Companies Act 1993
Breach of duties under ss 131, 135, 136 and 137 of the Companies Act
1993
[52]
The liquidators’ argument
[54]
The case for Mr and Mrs Petera
[55]
Decision
[56]
Breach of duty under s 194 to keep proper accounting records
[72]
The statutory defences under s 138 and s 300(2)
[83]
Remedy
[90]
Approach
[92]
Remedy for breaches under ss 131, 135, 136 and 137
[94]
Remedy for breach of the obligation to keep proper financial records
and to produce financial statements
[106]
Other relief sought by the liquidators
[109]
The costs of administering the liquidation
[110]
The liquidators’ costs in relation to the present proceeding
[116]
Recovery of liquidators’ legal costs
[120]
Result: summary
[126]
Costs
[129]
[1] This proceeding concerns a company called Petranz Limited (the company). Petranz was placed in liquidation on the application of the Commissioner of Inland Revenue on 30 January 2009. The plaintiffs are Petranz’s liquidators.
[2] The defendants, Mr and Mrs Petera, were the sole shareholders and directors of the company from the date of its incorporation in 2002. The company carried on business in the greater Auckland area as a cartage contractor. It specialised in the cartage of containers using three trucks, one of which was driven by Mr Petera. The company employed drivers to drive the other two trucks.
[3] The liquidators seek recovery from Mr and Mrs Petera of funds they withdrew, spent or transferred from the…
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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AGLC
Madsen-Ries v Petera [2015] NZHC 538
Case
[2015] NZHC 538
Decision Date
CaseChat Overview and Summary
The High Court of New Zealand heard a case brought by the liquidators of Petranz Limited, a cartage contractor, against its former sole shareholders and directors, Darrell Warren Karaneihana Petera and Diana Joy Petera. The liquidators sought recovery of funds the Peteras withdrew from the company's accounts before it went into liquidation, as well as orders requiring the Peteras to meet the company's debts and the costs of the liquidation. The Peteras contended that the payments in question formed part of their salary, which they were entitled to draw. The Court found that the Peteras had breached their duties under the Companies Act 1993 by continuing to operate the company while insolvent and failing to keep proper accounting records. The Court held the Peteras liable for the company's debts to the extent of $20,000 and ordered them to contribute $64,708 by way of compensation for breaching their duties under sections 131, 135, 136 and 137 of the Act. The Court declined to order the Peteras to pay the liquidators' legal costs, finding that such an order would not promote consistency in approach or provide an incentive for liquidators to conduct proceedings cost effectively.