Solicitors:
R B Hucker/D Lang Siu, Hucker & Associates, PO Box 3843, Shortland Street, Auckland
J V Ormsby/C L Webber, Wynn Williams Lawyers, PO Box 4341, Christchurch

JEFFREY PHILIP MELTZER AND LLOYD JAMES HAYWARD AS LIQUIDATORS OF WINDOW HOLDINGS LIMITED (IN LIQUIDATION) V ALLIED CONCRETE LIMITED HC AK CIV 2012-404-003170 [6 May 2013]

[1] Window Holdings Limited was put into liquidation on 26 May 2011. As it was named Harker Underground Construction Limited at time of the transaction in issue in this proceeding, I will refer to it as Harker.

[2] Until it was put into liquidation, Harker purchased concrete products from Allied Concrete Limited (Allied) over several years. It purchased these products on credit: initially on a standard (one month basis), but over the course of the relationship Allied agreed orally to an extended period.

[3] The applicant liquidators served notice on Allied that they regarded

$63,649.50 of a payment of $88,722.41 made by Harker to Allied on 21 October

2010 to be a voidable transaction. Allied gave a notice of objection. The liquidators brought the present application for a determination that the contested amount was a voidable transaction and for an order that Allied pay that sum to them to distribute in the liquidation.

The application

[4] There is no dispute that the payment was made on 21 October 2010, or that the transaction is within the two year period prior to liquidation within which an insolvent transaction can be voidable.1

[5] The liquidators accept that Harker and Allied had a continuing business relationship in terms of s 292(4B) of the Companies Act 1993 (the Act), conducted through a running account. They also accept that Allied is entitled to credit for goods and services that it provided to Harker from the time of the voidable transaction until date of liquidation. They have used a start date for the running
account calculation2 of 30 September 2010. The amount of the transaction that the

1Companies Act 1993, ss 292(1) and s292(5).
2 They base this calculation on a start date of the point of Harker’s peak indebtedness to Allied within
the two year period, relying on Paul Heath and Michael Whale (eds), Heath and Whale on Insolvency
(loose leaf ed, LexisNexis) at [24.64] and Olifent v Australian Wine Industries Pty Ltd (1996) 130
FLR (SASC). This peak indebtedness rule was accepted by this Court in Blanchett v…

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 Meltzer v Allied Concrete Ltd

Details

AGLC: Meltzer v Allied Concrete Ltd [2013] NZHC 977
Case: [2013] NZHC 977
Decision Date: 6 May 2013

CaseChat Overview and Summary

The matter before the Court was an application brought by the liquidators of Window Holdings Limited (then known as Harker Underground Construction Limited) against Allied Concrete Limited. The liquidators sought a declaration that a payment made by Harker to Allied was a voidable transaction under the Companies Act 1993, and an order that Allied repay the contested sum to the liquidators. The Court was required to determine whether the payment was an insolvent transaction, and whether Allied had a defence under s 296(3) of the Act. The Court found that the payment was an insolvent transaction, and that Allied had not established the defence under s 296(3). The Court set aside the contested payment and ordered Allied to repay the sum to the liquidators, together with interest.

The Court first determined that the payment was an insolvent transaction. The liquidators had established that the payment was made within two years of the company's liquidation, and that Harker and Allied had a running account. The difference between the amount owed by Harker as at 30 September 2010 and the amount due as at the date of liquidation was $63,649.50, which was the amount the liquidators sought to recover. Allied did not dispute that the payment was an insolvent transaction.

The Court then turned to whether Allied had a defence under s 296(3) of the Act. The Court found that Allied had established the first and second limbs of the defence: that it acted in good faith and that there was no reasonable basis to suspect that Harker was or would become insolvent. However, the Court found that Allied had not established the third limb of the defence, namely that it gave value for the payment. The Court found that Allied had not given any new value at the time of the payment, and that the release of a liability for a debt did not constitute value for the purposes of s 296(3)(c). The Court also found that Allied had not altered its position in the reasonably held belief that the payment was valid and would not be set aside.

The Court made orders setting aside the contested payment to the extent of $63,649.50, and ordering Allied to repay that sum to the liquidators, together with interest. The Court also ordered that the liquidators were entitled to costs on a scale 2B basis, together with disbursements as fixed by the Registrar.

Orders