Nellies v Mark - [2024] NZHC 3630

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE

CIV-2018-406-10

[2024] NZHC 3630

BETWEEN IAIN ANDREW NELLIES as liquidator of PMT 2010 Limited (in liquidation)
Plaintiff

AND

PETER MARK and JEANETTE PATRICIA MARK

Defendants

CIV-2021-406-13

BETWEEN

PMT 2010 LIMITED (in liquidation) First Plaintiff

IAIN ANDREW NELLIES as liquidator of PMT 2010 Limited (in liquidation)

Second Plaintiff

AND

PETER MARK and JEANETTE PATRICIA MARK

First Defendants

WISHEART MACNAB & PARTNERS TRUSTEE COMPANY LIMITED and

DAVID JOHN PAUL as trustees of the Mark Family Trust

Second Defendants

Hearing: 29 July – 2 August and 6 – 7 August 2024

Appearances:

T J Shiels KC and D P MacKenzie for Plaintiffs P A Morten and M Robertson for Defendants

Judgment:

2 December 2024

JUDGMENT OF McHERRON J

NELLIES v MARK [2024] NZHC 3630 [2 December 2024]

Table of Contents

Scope of the present claim[5]
Background[18]
Summary of defence to liquidator’s claim[65]
Limitation defences[97]
My factual findings[102]
The defendants’ s 138 defence (reliance on information and advice provided by a
professional adviser) is rejected[188]
Summary of factual findings[196]
Liability under the pleaded causes of action[197]
First cause of action — knowing receipt by the Marks of $680,000[200]
Second cause of action — s 301 claim — breach of directors’ duties[212]
Third cause of action — s 347 Property Law Act — Assignment of vendor finance loan
and removal of other assets on 20 December 2013[226] Fourth cause of action — by PMT against Mr and Mrs Mark — for current account debt [239] Fifth cause of action — PMT against trustees — claim for debt due[244]
Sixth cause of action — PMT against Mr and Mrs Mark — knowing receipt of advance
owing by trustees[251]
Seventh cause of action — by PMT against trustees — dishonest assistance[260]
Eighth cause of action — by PMT against Mr and Mrs Mark — s 300 Companies Act[266]
Ninth cause of action — by PMT against Mr and Mrs Mark — ss 52 and 56 Companies
Act[273]
Conclusion[285]

[1] This complex insolvency dispute involving a closely held Blenheim flooring company called Peter Mark Ltd (PMT) began nearly two decades ago as a simple consumer dispute concerning the quality of tiling work.1 For the reasons set out below I uphold the liquidator’s claim to take possession of and realise PMT’s assets, by means of several causes of action under the Companies Act 1993 and other common law and equitable causes of action, all of which succeed. PMT’s directors instructed others to remove the assets from the company to defeat a relatively modest creditor’s claim. I find there has been a concerted effort by a range of individuals to conceal what happened and make it look like the assets were removed earlier than actually occurred. Largely for this reason, I have rejected the defendants’ limitation defences.

1 Peter Mark Ltd was incorporated in 1989. Its directors and shareholders were defendants Peter and Jeanette Mark. In July 2010 Peter Mark Ltd changed…

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 Nellies v Mark

Details

AGLC: Nellies v Mark [2024] NZHC 3630
Case: [2024] NZHC 3630
Decision Date: 2 December 2024

CaseChat Overview and Summary

The case of Nellies v Mark involves a complex dispute concerning the insolvency of Peter Mark Ltd (PMT), a Blenheim-based flooring company. The proceedings were initiated by the liquidator, Iain Nellies, against the former directors, Peter and Jeanette Mark, and other defendants, to recover assets and liabilities that were allegedly removed from PMT's balance sheet to avoid paying a judgment debt owed to the Harnetts. The court found that PMT had sufficient assets to meet the Harnett judgment when it was given on 3 December 2013 but that more than $2.7 million worth of assets were removed from PMT's balance sheet on 20 December 2013 through manual journal entries. The court held that the defendants' actions constituted breaches of directors' duties, fraudulent concealment, and other violations of the Companies Act. Consequently, the court ordered the defendants to restore the removed assets to PMT and to pay additional sums owed to the company. The judgment underscores the importance of directors acting in good faith and in the best interests of the company, and the consequences of failing to do so.

Orders