Hearing:	29 September 2015
Court:	Winkelmann, Dobson, Gilbert JJ
Counsel:	B D Gustafson and D Duffield for Appellant D J C Russ for Respondents
Judgment:	10 May 2016 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed in part.
B We make an order pursuant to s 299(1) of the Companies Act 1993 setting aside as against the liquidator the general security agreement made between Polyethylene Pipe Systems Ltd (PPS) and Mr Browne dated 28 July 2008.
CWe make an order pursuant to s 299(3) of the Companies Act requiring Mr Browne to pay PPS the sum of $201,316. Mr Browne is entitled to claim as a creditor in the liquidation of PPS for the amount paid by him pursuant to this order.
DWe make an order pursuant to s 295(a) of the Act requiring David Browne Contractors Ltd (DBC) and David Browne Mechanical Ltd (DBM) to pay PPS the sums of $565,303 and $347,634 respectively. We make an order pursuant to s 295(g) of the Companies Act that DBC and DBM are entitled to claim as creditors in the liquidation of PPS to the extent of the amounts refunded by each of them as a result of this order.
EThe order for costs in the High Court is quashed. The respondents must pay the appellant costs in the High Court, to be fixed in that Court.
FThe respondents must pay the appellant costs in this Court for a standard appeal on a band A basis, together with usual disbursements.

____________________________________________________________________

Table of Contents

_Toc449082035

Introduction[1]

Chronology

PPS[7]
DBC and DBM[9]
McConnell Dowell Contract[13]
First weld failure[16]
Second weld failure[27]
PPS directors resolve to repay advances to Mr Browne, DBC and              DBM and grant security for a further advance from Mr Browne0
Transfer of PPS’ shares in PPS-Frank NZ Ltd to Browne Family Trust[34]
Directors of PPS approve new borrowings from Mr Browne secured               by a GSA[37]
Third weld failure[39]
Quantification of loss from first failure[40]
Mr Browne advances $450,000 to PPS secured by the GSA
PPS repays unsecured advances from DBC, DBM and Mr Browne
Quantification of loss from second failure
Duncan Cotterill advises that PPS is not covered under McConnell       Dowell’s policy[44]
Quantification of loss from third failure[47]
McConnell Dowell issues notice of adjudication[48]
Mr Browne demands repayment of amount secured by the GSA[49]
Adjudication[50]
Mr Browne appoints a receiver[52]
PPS liquidated[55]
Payments to Mr Browne by the receiver[58]
Liquidator’s notices to set aside payments and GSA[60]

First ground of appeal – was the Associate Judge wrong not to set aside the GSA pursuant to s 299?

Proceedings against Mr Browne in the High Court[62]
Relevant statutory provisions[64]
High Court judgment[66]
Submissions[72]
Approach on appeal[75]
Did Mr Browne have sound reasons to believe…

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 Petterson v Browne

Details

AGLC: Petterson v Browne [2016] NZCA 189
Case: [2016] NZCA 189
Decision Date: 10 May 2016 at 11.30 am

CaseChat Overview and Summary

The appeal is allowed in part. The Court set aside as against the liquidator a general security agreement (GSA) made between Polyethylene Pipe Systems Limited (PPS) and David Browne. The Court ordered Mr Browne to repay $201,316, which he received from PPS after the company was placed in liquidation. The Court ordered David Browne Contractors Limited and David Browne Mechanical Limited to repay sums totalling $912,937 that they received from PPS. The orders are made pursuant to sections 299(1) and 299(3) of the Companies Act 1993 and section 295(a) of that Act, respectively. The Court quashed the order for costs in the High Court and ordered the respondents to pay the appellant costs in both the High Court and this Court.

Orders