Reynolds v Ascot Aluminium Ltd - [2012] NZHC 1787

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-001337 [2012] NZHC 1787

UNDER The Companies Act 1993

IN THE MATTER OF The Liquidation of NZB Developments Limited (In Liquidation) Formerly NZ Built Ltd

BETWEEN GRANT BRUCE REYNOLDS Applicant Liquidator

ANDASCOT ALUMINIUM LTD Respondent Creditor

Hearing: 20 July 2012 (on the papers) Counsel: S W Greer for applicant
M Keall for respondent

Judgment: 20 July 2012

INTERIM JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 20 July 2012 at 4.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
S W Greer, Solv Law Limited, PO Box 12448, Penrose, Auckland 1642
K King, Wadsworth Ray, PO Box 26-301, Epsom

Counsel:
M Keall, PO Box 6905, Auckland

GRANT BRUCE REYNOLDS V ASCOT ALUMINIUM LTD HC AK CIV 2012-404-001337 [20 July 2012]

[1] This application for an order to set aside a payment as a voidable transaction is listed for a defended hearing on 6 August 2012. The matter has been put before me with counsel’s memoranda of 11 July 2012 (the applicant’s memorandum) and 17
July 2012 (the respondent’s memorandum) concerning an issue over service of an

underlying notice.

[2] The substantive application is brought on the ground that the applicant liquidator on 18 January 2012 served on the respondent’s registered office a notice under s 294 of the Companies Act 1993 to set aside a voidable transaction. The respondent did not file a notice of opposition, as a consequence of which the transaction has been set aside by operation of law. The liquidator’s application starts from that premise.

[3] It is apparent from the evidence before the Court that the notice was served on the respondent’s registered office and address for service as at the date of service (as recorded in the Companies Register). Although the liquidator did not appreciate the fact at that time, he now accepts that the premises were vacant. The evidence is that the respondent used the office of its tax agent as its registered office, and the tax agent went into receivership and ceased trading (and vacated the premises) about four months before the notice was served. The respondent did not change its registered office until about a month after the notice was served. The respondent says that the notice was not forwarded by the landlord of the premises.

[4] The parties take a different position over the best manner of addressing this issue. The applicant seeks an opportunity to re-serve the notice, and asks that the application be adjourned to allow time for that, and for filing of any notice of objection, followed by an amended application and opposition. The respondent considers that the application is a nullity, and should be discontinued.

[5] The notice is a step in a legal proceeding, and must be served in accordance with s 387 of the Companies Act 1993.1 There are two aspects to the test for service
under s 387:

1 Re WSA (NZ) Ltd (in rec…

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: [2012] NZHC 1787
Decision Date: 20 July 2012

CaseChat Overview and Summary

In Reynolds v Ascot Aluminium Ltd, the court was asked to consider an application by Grant Bruce Reynolds, the liquidator of NZB Developments Limited (in liquidation), formerly NZ Built Ltd, to set aside a payment as a voidable transaction under the Companies Act 1993. The respondent, Ascot Aluminium Ltd, is a creditor of the company in liquidation. The application was brought because the respondent did not file a notice of opposition to a notice served by the liquidator under s 294 of the Companies Act, resulting in the transaction being set aside by operation of law. The court had to determine whether the service of the notice on the respondent was valid and effective, and if not, what relief should be granted to avoid any miscarriage of justice.

The primary legal issue before the court was whether the notice served on the respondent was validly and effectively served in accordance with s 387 of the Companies Act. The court noted that while the notice was validly served at the respondent's registered office and address for service, it was ineffective because the premises were vacant at the time of service. The court then considered the appropriate relief to grant in these circumstances, given that the notice was a step in a legal proceeding and ineffective service could lead to a miscarriage of justice. The court held that the application was not a nullity but required the parties to address the issue of service effectively.

The court concluded that the respondent should be given an opportunity to raise opposition to the notice, as well as to the application. The court directed the parties to confer and advise the court by memorandum by a specified date on whether they had reached an agreement on the procedure to follow. The hearing was to remain in place, although it appeared unlikely that the parties would be in a position to proceed on the scheduled date. The court also allocated a telephone conference for further directions and reserved costs.

The court ordered that the parties were to confer and provide a memorandum by the specified date, and a telephone conference was to be held for further directions. The hearing was to remain in place, and costs were reserved.

Orders