Monocrane NZ Limited (in liquidation) v Moncur - [2016] NZCA 139

IN THE COURT OF APPEAL OF NEW ZEALAND

CA18/2015
[2016] NZCA 139

BETWEEN	MONOCRANE NZ LIMITED (IN LIQUIDATION) First Appellant
DAMIEN GRANT AND STEVEN KHOV AS LIQUIDATORS OF MONOCRANE NZ LIMITED (IN LIQUIDATION) Second Appellants
AND	ANGELA MONCUR Respondent

Hearing:	16 March 2016
Court:	Randerson, French and Kós JJ
Counsel:	B J Norling and A Ho for Appellants D P Weaver and A J Bell for Respondent
Judgment:	19 April 2016 at 4.00 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe first appellant and second appellants as liquidators must pay the respondent costs for a standard appeal on a band A basis with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

An estranged husband and wife enter into a relationship property agreement pursuant to the Property (Relationships) Act 1976 (the Act). Under the agreement the husband assumes full ownership and control of a company owned jointly by the husband and wife. The wife agrees to resign her directorship and transfer her shares to the husband. He agrees to assume sole responsibility for the shareholders’ current account liability. Subsequently, the husband places the company into voluntary liquidation and appoints liquidators. The liquidators issue proceedings against the wife for recovery of the full amount of the shareholders’ current account liability.
That was the scenario before Keane J in the High Court. The Judge held the relationship property agreement protected the wife from any liability for the shareholders’ current account and dismissed the claim.[1]
[1]Monocrane NZ Ltd (in liq) v Moncur [2014] NZHC 3012.
The liquidators now appeal the decision.

Factual background

Mr and Ms Moncur separated on 12 January 2009 after 25 years of marriage. After taking independent legal advice, they entered into a relationship property agreement on 19 April 2010 pursuant to s 21A of the Act. The agreement was subsequently varied. It was common ground that the agreement and variation complied in all respects with the requirements of the Act and were binding on Mr and Ms Moncur.
At the time of entering the relationship property agreement, Mr and Ms Moncur were the sole directors of a company called Monocrane NZ Ltd (Monocrane). They and their family trust (the trust) owned 900 of the 1000 shares in Monocrane. The remaining shares were owned by their son Luke and Luke’s family trust. The parties agreed for the purposes of this appeal the existence of Luke’s shareholding was not relevant. We have therefore proceeded on the basis that for all practical purposes the company was owned beneficially by Mr and Mrs Moncur.
During the financial year ended 31 March 2010 Mr and Ms Moncur had each taken drawings from a shareholders’ current account that was in their joint names, leaving the account overdrawn by $130,729. The previous financial year, the current account balance had been nil.
Under the relationship property agreement Mr Moncur took full ownership and control of Monocrane. He obtained all of Monocrane’s assets and agreed to assume responsibility for the overdrawn…

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: [2016] NZCA 139
Decision Date: 19 April 2016 at 4.00 pm

CaseChat Overview and Summary

Monocrane NZ Limited (in liquidation), through its liquidators, appealed against a High Court decision dismissing their claim against Angela Moncur for the recovery of a shareholders' current account liability. The relationship property agreement between Mr and Ms Moncur provided that Mr Moncur would assume sole responsibility for the overdrawn current account. The liquidators argued the relationship property agreement did not preclude their claim, and the High Court judge had erred in relying on Ready Mark Ltd v Grant. The Court of Appeal considered that the High Court judge was correct to hold that the relationship property agreement was a complete defence to the liquidators' claims and that the Ready Mark decision was of limited relevance. The Court found that it was unconscionable for the liquidators to seek to recover the current account debt from Ms Moncur, given the close association between Monocrane and Mr Moncur and the benefits Monocrane received from the relationship property agreement. The appeal was dismissed with costs to be paid by the liquidators on a band A basis.

Orders