PNT Construction Limited (in liquidation) v Cronin

[2019] NZHC 798

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2017-404-1915

[2019] NZHC 798

BETWEEN

PNT CONSTRUCTION LIMITED (IN LIQUIDATION)

Plaintiff

AND

TIMOTHY MORGAN FITZGERALD CRONIN

First defendant

PNT TRUSTEE LIMITED

Second defendant

Hearing:	11 April 2019
Appearance:	BMK Pamatatau for the plaintiff
Judgment:	12 April 2019

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 12 April 2019 at11.00 am pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Counsel:

Bruce Pamatatau, Barrister, Auckland

PNT CONSTRUCTION LTD v CRONIN [2019] NZHC 798 [12 April 2019]

[1]                 The plaintiff seeks to recover the amount of overdrawn shareholder current accounts belonging to the defendants, sequentially the plaintiff’s sole shareholder. No defence is filed to that claim.

[2]                 The claim against the first defendant is “halted” on the first defendant’s bankruptcy.1

[3]                 The plaintiff seeks judgment by default on its claim to $210,759.00 advanced to the second defendant. There is no evidence such was authorised by the plaintiff’s board.2 Section 161(5) of the Companies Act 1993 makes the second defendant “personally liable” to the plaintiff for that sum. The liquidator sought payment by 20 April 2017. It remains unpaid.

[4]                 The plaintiff might have sealed judgment for that sum as a liquidated demand,3 if a sum that “can be precisely calculated on the basis of” s 161 of the Companies Act 1993.4 Otherwise the plaintiff has filed affidavit evidence establishing to my satisfaction its cause of action against the second defendant for that sum.5

[5]                 Interest also is claimed in an amount calculated in the plaintiff’s accounts. But the plaintiff does not identify the contractual or statutory basis for its quantification or calculation, and I am not satisfied the second defendant is liable for it. However, Schedule 1, cl 1 of the Interest on Money Claims Act 2016 – which came into force on 1 January 2018 – provides s 87 of the Judicature Act 1908, although repealed by  s 182(1) of the Senior Courts Act 2016, “continues to apply to every civil proceeding commenced before this clause comes into force”.

[6]                 This proceeding was commenced in 2017. Section 87(1) continues to apply.   I thus have discretion to order included in the judgment sum:

… interest at such rate, not exceeding the prescribed rate, as [the Court] thinks fit on the whole or any part of the debt or damages for the whole or any part

1      Insolvency Act 2006, s 76(1).

2      Companies Act 1993, s 161(1).

3      High Court Rules 2016, r 15.7(1).

4      Rule 15.7(5)(ab).

5      Rule 15.9(4).

of the period between the date when the cause of action arose and the date of the judgment.

Since 1 July 2011, clause 4 of the Judicature (Prescribed Rate of Interest) Order 2011 prescribes that rate as “5.0% per year”.

[7]                 While not here applicable in its terms, also relevant to the exercise of my discretion is s 10(1) of the Interest on Money Claims Act 2016, which provides “In every money judgment, a court must award interest under this section as compensation for a delay in the payment of money”. While I have discretion to award interest at all, the 2016 Act illustrates a general expectation delays in payment of money will be compensated. But my discretion to award interest under the 1908 Act may not exceed 5 per cent per annum.

[8]                 Section 13 of the 2016 Act mandates establishment of an “Internet site calculator”, which calculates interest rates for the purposes of the Act. The site’s FAQ explains:6

The interest rate is calculated for a specific day by:

1.Taking the six most recent observations for the retail 6-month term deposit rate that have been published by the Reserve Bank of New Zealand (RBNZ), and taking an average of these six rates. The average is the base rate.

2.Adding the base rate to the premium (0.15%). The result becomes the per annum simple interest rate.

3.Converting the per annum simple interest rate into a daily effective rate. The formula for this conversion is as follows:

Daily    effective   rate    =    ((1+“per   annum   simple   interest   rate   as

%”/100)^(1/“Days in the year”-1) x 100

The result is the interest rate expressed as a daily effective rate for the specific day.

[9]                 I also take judicial notice of the Reserve Bank of New Zealand’s retail 6-month term deposit rate, which has been below 4 per cent per annum since mid-2015.7 I am not prepared to award interest at the maximum Judicature Act rate. To do so would be

6      “Civil Debt Interest Calculator” Ministry of Justice < Rates on Lending and Deposits” Reserve Bank of New Zealand < allow the plaintiff a meaningful premium. The more just calculation is in accordance with the 2016 Act’s calculator.

[10]              I therefore give the plaintiff judgment by default on its claim against the second defendant in the amount of $210,759.00, plus interest from 20 April 2017 at rates calculated in accordance with the Interest on Money Claims Act 2016 (but not exceeding 5 per cent per annum), and 2B costs and disbursements as fixed by the Registrar.

—Jagose J