Onestop Projects Limited (in liquidation) v Corin

[2021] NZHC 3170

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001030

[2021] NZHC 3170

BETWEEN

ONESTOP PROJECTS LIMITED (IN LIQUIDATION)

First Plaintiff

DAMIEN GRANT
Second Plaintiff

AND

ANTHONY RONALD DAMIAN CORIN

First Defendant

VIVIENNE CORIN

Second Defendant

Hearing:	24 November 2021
Counsel:	WMA van Roosmalen for Plaintiffs No appearance for Defendants
Judgment:	24 November 2021

ORAL JUDGMENT OF DOWNS J

Solicitors/Counsel:

WMA van Roosmalen, Auckland.

ONESTOP PROJECTS LTD (IN LIQ) v CORIN [2021] NZHC 3170 [24 November 2021]

[1]This case is before me as Duty Judge, for formal proof.1

[2]        Onestop Projects Ltd, or Onestop, was placed in liquidation 24 August 2018. Damien Grant is liquidator.

[3]        Onestop and Mr Grant allege Anthony Corin, who was Onestop’s shareholder and director, owes Onestop $237,932.23. They seek judgment in this amount.

[4]        Mr Corin had a shareholder’s current account with Onestop.2 An analysis of Onestop’s financial records and bank records reveals Mr Corin withdrew $237,932.23 from the current account. This has not been repaid.

[5]        Mr Grant has put the allegation to Mr Corin. In short, Mr Corin says the amount represents remuneration as a director, $138,653.08 of which he has paid to his wife, Vivienne.

[6]        A company may authorise the payment of remuneration to a director, but unsurprisingly, this must be properly documented.3 In Mizeen Painters Ltd (in liq) v Tapusoa, Muir J said:4

In the absence of an explanation, drawings must be treated as advances from the company to the shareholders that are repayable on demand. They remain as repayable advances unless and until a company resolution classifies them otherwise. When the company’s accounting records provide no explanation for the drawings in the shareholders current account, they must be treated as advances from the company to the shareholders. The onus is on the defendants as directors and fiduciaries of the company to account to it for funds and establish the legitimacy of any funds taken from the company; in other words, to explain what has become of company property in their hands.

1      Associate Judge Sussock declined judgment by default on the basis the claim is not for a liquidated demand. The Judge set the case down for formal proof. To my eye, this is a claim for a liquidated demand but for reasons that will become apparent, nothing turns on this.

2      Current account.

3      Companies Act 1993, s 161.

4      Mizeen Painters Ltd (in liq) v Tapusoa [2015] NZHC 826, [2016] NZAR 423 at [25], cited with approval by the Court of Appeal in Monnery v Covendium Ltd (in liq) [2020] NZCA 345.

[7]        What this means is this: in the absence of contrary evidence, drawings on a current account constitute a debt owed by the shareholder to the company; a debt repayable on demand.5

[8]        While Mr Corin contends the figure represents remuneration, there is no evidence to support this proposition. Absent such evidence, the figure is a debt, repayable on demand.

[9]It is unnecessary to analyse the alternative cause of action.

Result

[10]      The first cause of action is established. Onestop and Mr Grant are awarded interest pursuant to s 10 of the Interest on Money Claims Act 2016 and scale costs.

……………………………..

Downs J

5      Monnery v Convendium Ltd (in  liq), above n 4,  and  Kelstworural Ltd (in  liq) v  Mounsey-Ross

[2019] NZHC 752.