Reynolds v JPL Trading Limited - [2013] NZHC 2287

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-5665 [2013] NZHC 2287

UNDER The Property Law Act 2007

IN THE MATTER of an application to set aside prejudicial dispositions; s 348 of the Property Law Act 2007

BETWEEN GRANT BRUCE REYNOLDS as liquidator of JAMES PRODUCTS LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) AND KLASSE PROPERTIES LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)
Plaintiff

ANDJPL TRADING LIMITED Defendant

Hearing: 3 September 2013

Appearances: K J Crossland for the Plaintiff
R B Hucker (given leave to withdraw) for the Defendant

Judgment: 3 September 2013

ORAL JUDGMENT OF PRIESTLEY J

Counsel/Solicitors:
K J Crossland, Stace Hammond, Hamilton
R B Hucker, Hucker Associates, Auckland

REYNOLDS v JPL TRADING LIMITED [2013] NZHC 2287 [3 September 2013]

[1] The plaintiff, Mr Reynolds, is the liquidator for James Products Limited (James) and Klasse Properties Limited (Klasse). Mr Reynold’s is an experienced liquidator. He has sworn two affidavits in this proceeding dated 18 September 2012 and 23 January 2013 respectively.

[2] He has also helpfully prepared, at my request, a wiring or flow diagram for James, Klasse, and the defendant (JPL), which have been produced as exhibits A and B respectively.

[3] The relief the plaintiff seeks is under s 348 of the Property Law Act 2007. That relief is to set aside, in terms of subpart 6 of Part 6 of the Act, two dispositions. The first disposition is a deed of forgiveness of debt made by James on 6 April 2011. The second disposition is a deed of forgiveness of debt made by Klasse on 4 April
2011. The beneficiary of both deeds of forgiveness was the defendant JPL Trading

Limited.

[4] All three companies, James, Klasse, and JPL are in liquidation. All three companies, as to shareholders and directors, were controlled by members of the Stenner family. I am told that Mr and Mrs Stenner are both undischarged bankrupts currently living in Australia. JPL itself was placed in liquidation as a result of a special resolution organised by Mr M Stenner, the son of the other two Stenners.

[5] Initially the plaintiff ’s application was opposed. A statement of defence was filed. However, the defendant has, for various reasons which are not relevant here, decided not to mount its defence in Court. Mr Hucker appeared today as a matter of courtesy for the defendant and confirmed that was his client’s position. I gave Mr Hucker leave to withdraw. The liquidators of JPL were well aware of this hearing today. As I have said they have chosen not to pursue their defence or offer any evidence in support of it.

[6] The evidence I have heard was from first, Mr Reynolds and secondly, from Mr C N George who was formerly an executive of Asset Finance Limited (Asset). The current position of Asset is that it is a creditor of both James and Klasse. It was

also a creditor of Mr and Mrs Stenner and instrumental, as I understand it, in making them bankrupt.

[7] 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.

Keep reading for free

Create a free CaseChat account to read Reynolds v JPL Trading Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2013] NZHC 2287
Decision Date: 3 September 2013

CaseChat Overview and Summary

The case of Reynolds v JPL Trading Limited involves the plaintiff, Mr. Grant Bruce Reynolds, as the liquidator of James Products Limited (James) and Klasse Properties Limited (Klasse), both of which are in receivership and liquidation. Mr. Reynolds seeks to set aside two dispositions made by James and Klasse in favor of the defendant, JPL Trading Limited, under section 348 of the Property Law Act 2007. These dispositions, both deeds of forgiveness of debt, were made on 6 April 2011 by James and 4 April 2011 by Klasse. The court must decide whether these dispositions are voidable under the Act as prejudicial dispositions, made with intent to prejudice creditors or without receiving reasonably equivalent value.

The central legal issues concern the interpretation and application of sections 345-348 of the Property Law Act 2007. Specifically, the court must determine whether the deeds of forgiveness qualify as dispositions under section 345(2)(d) and whether they fall within the scope of section 346(1)(b) as gifts made by insolvent debtors or with intent to prejudice creditors. Additionally, the court must assess whether the conditions in section 346(2) were met, namely whether James and Klasse were insolvent at the time of the dispositions. The court also considers whether the requirements of section 348(1)(a) have been satisfied and whether there are any bona fide purchasers for value protected by section 349.

The court found that the deeds of forgiveness constituted dispositions within the meaning of section 345(2)(d) as they were releases of debts. It was clear that the dispositions were gifts without any countervailing consideration. The court determined that both James and Klasse were insolvent at the time of the dispositions, as evidenced by their defaults on loan obligations and the absence of any countervailing evidence of solvency from JPL. Finally, the court was satisfied that the notice requirements of section 347 had been met and that there were no bona fide purchasers for value. Consequently, the court ordered that JPL Trading Limited pay James Products Limited $838,749 and Klasse Properties Limited $506,405. The court also awarded costs to the plaintiff on the 2B scale, taking into account the undefended nature of the hearing but also the legitimate expenditure on pleadings and interlocutory matters.

Orders