Petranz Limited (in liquidation) v Smith - [2017] NZHC 1225

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-3139 [2017] NZHC 1225

IN THE MATTER
of an application for particular discovery

before proceeding commenced under Rule
8.20 of the High Court Rules 2009

BETWEEN

PETRANZ LIMITED (IN LIQUIDATION) Applicant

AND

BRUCE PETER JAMES SMITH AND AVIEMORE TRUSTEES (2013) LIMITED

Respondents

Hearing: 12 May 2017

Appearances:

N Malarao for the Applicant
J Belthazar for the Respondents

Judgment:

7 June 2017

JUDGMENT OF GORDON J

This judgment was delivered by me
on 7 June 2017 at 12.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors: Meredith Connell, Auckland
Gibbs Mills Livingston, Highland Park, Auckland

PETRANZ LTD (IN LIQ) v SMITH [2017] NZHC 1225 [7 June 2017]

Introduction

[1] Darrell and Diana Petera are the directors and shareholders of Petranz Ltd (the applicant), which was incorporated on 21 August 2002. On 30 January 2009, the High Court at Auckland placed the applicant into liquidation.1 In 2015, the High Court ordered the Peteras to pay a total of $349,310 to the applicant.2 The Peteras failed to make payment and consequently were adjudicated bankrupt on 28 July
2016. The applicant has submitted a proof of debt in the bankruptcies.3

[2] In addition to the proof of debt filed in the bankruptcies, the applicant considers that it may be appropriate to bring proceedings against the respondents to set aside certain dispositions of property under s 348 of the Property Law Act 2007 (PLA). The applicant believes that the respondents may have been part of a scheme designed to systematically alienate property belonging to the Peteras in order to place that property beyond the reach of creditors. If successful in its proposed claim, the applicant would seek orders requiring the respondents to pay reasonable compensation to the applicant to reflect the value of that property. That money
would be vested in the Official Assignee4 and would be available to pay debts owed

by the Peteras, including debts owed to the applicant.

[3] For the purposes of making its claim the applicant seeks orders for pre- commencement discovery under r 8.20 of the High Court Rules 2016. The respondents oppose the application.

[4] This Court may make an order for pre-commencement disclosure if it appears that:

(a) The applicant is or may be entitled to claim relief against the respondents;
(b)It is impossible or impractical to formulate the claim without the documents sought; and

1 Affidavit of Henry David Levin dated 7 December 2016 at [2].
2 Madsen-Ries v Petera [2015] NZHC 538.
3 Affidavit of Henry David Levin dated 7 December 2016 at [49].
4 Property Law Act 2007, s 350(1)(a).

(c) There are grounds to believe that the documents may be or may have been in the possession of the respondents.

In this judgment I determine each of these three issues so as to decide if pre- commencement discovery should be ordered. I also determine whether costs should be ordered.

Factual background

[5] The factual background to 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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Details

Case: [2017] NZHC 1225
Decision Date: 7 June 2017

CaseChat Overview and Summary

The applicant, Petranz Limited (in liquidation), has applied for pre-commencement discovery before proceeding commenced under Rule 8.20 of the High Court Rules 2009 against the respondents, Bruce Peter James Smith and Aviemore Trustees (2013) Limited. The applicant seeks discovery of various documents to assist in the formulation of a claim against the respondents to set aside certain dispositions of property under section 348 of the Property Law Act 2007. The respondents oppose the application. The Court found that there is a real probability that the applicant may have a claim against the respondents in relation to the Puriri Road mortgage, but not in relation to the other property transactions. The Court also found that it is impossible or impractical to formulate the claim without the documents sought in relation to the Puriri Road mortgage. Finally, the Court found that the documents may be or have been in the possession of the respondents. For these reasons, the Court made an order for pre-commencement discovery in part, limited to the documents which are necessary in order to establish a factual basis for the intended claim in respect of the Puriri Road mortgage. The Court declined to make any order in respect of costs.

Orders