Rich Bryan Audio Limited v Arcanist Limited

[2025] NZHC 2826

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-000936

[2025] NZHC 2826

IN THE MATTER

of an application under section 241(2)(c) of

the Companies Act 1993 to put the defendant company into liquidation

BETWEEN

RICH BRYAN AUDIO LIMITED

Plaintiff

AND

ARCANIST LIMITED

Defendant

Hearing:

22 September 2025

Appearances:

M Pascariu for the Plaintiff

J Duckworth for the Defendant

Judgment:

26 September 2025

JUDGMENT OF ASSOCIATE JUDGE GELLERT

This judgment was delivered by me on 26 September 2025 at 4:00 pm.

Pursuant to Rule 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

Date ………………….

Solicitors:

Hamilton Locke, Auckland

Jennifer G Connell and Associates, Auckland

RICH BRYAN AUDIO LTD v ARCANIST LTD [2025] NZHC 2826 [26 September 2025]

Introduction

[1]                 This is a defended application to place the defendant company, Arcanist Ltd (Arcanist), into liquidation. The plaintiff, Rich Bryan Audio Ltd (RBA), served a statutory demand in the amount of $133,729.72 on 10 February 2025. No application was made to set aside the statutory demand and it expired unpaid.

[2]There are also creditors appearing in support of the liquidation application:

(a)Andy Chen, in the amount of $14,160;

(b)Toby Goode, in the amount of $30,340; and

(c)Ari Greene-Young, in the amount of $22,552.29.

[3]                 Each of  those  creditors  also  served  statutory  demands  on  Arcanist  on  10 February 2025. No applications were filed to set aside any of those demands.1

[4]                 RBA says that following the expiry of its statutory demand, a presumption of insolvency has arisen under s 287(a) of the Companies Act 1993 (Act) in respect of Arcanist. RBA asserts that Arcanist is insolvent and that it cannot rebut this presumption because there is no genuine dispute as to a substantial part of the debts claimed by its creditors. Accordingly, RBA says that Arcanist should be placed into liquidation. Arcanist defends the application on the basis that it disputes the amounts owed to the RBA on the basis of overcharging, raises counterclaims, and says that it is in fact solvent.

Background

[5]                 RBA started contracting to Arcanist from 2019 on an intermittent basis. Arcanist provides e-sports and gaming related services. RBA provides broadcast production, audio engineering, video editing, and associated services.

1      Mr Duckworth, counsel for Arcanist, raised a preliminary issue suggesting that the filing fees had not been paid in relation to the creditors’ appearances in support. However, the Registry has confirmed that these were paid on 18 August 2025.

[6]                 There was no dispute between the parties that work was done by RBA for Arcanist, for which payment was required. There is also no dispute between the parties that there were no written terms of engagement as to the supply of RBA’s services, nor were there any formal agreements as to the supply of services for the other creditors who appeared in support of RBA’s liquidation application.

[7]                 The debt that was claimed in RBA’s statutory demand related to invoices that it rendered in 2022 and 2023. These primarily related to a project undertaken by Arcanist in 2023 for Riot Games, providing broadcasting services. It was explained to me that the live broadcast would usually begin at 9.00 pm and would end when the games had finished. That could be as early as 12.00 am or more usually on or around

2.00 am. In some exceptional cases, the games would continue after 2.00 am.

[8]                 Mr Bryan, the sole director of the plaintiff, gave evidence that the project involved five contractors, comprising two on-screen hosts, two broadcast operators, and a makeup artist/production assistant. He said that he was involved in all stages of production of the project, including video production, music production, photography, social media management, studio management, talent management, broadcast operations, and creative direction and production.

[9]                 Mr Spiller, the sole director of Arcanist, also gave evidence. Consistent with the above, Mr. Spiller’s evidence is that RBA’s role was the equivalent of the project manager. He said that the work undertaken by RBA for Arcanist in 2023 was at a more senior level than in previous years, so RBA was made aware of the budget Arcanist had in relation to Riot Games. This, he says, meant that RBA had awareness of the amounts involved in the project. Mr Spiller also said that the daily rate to be paid to RBA had to conform with Arcanist’s operating budget. The operating budget for 2023 was in evidence. It had a line item for provision of $7,500 per month for RBA, plus amounts for the other creditors who appeared in support. Mr Spiller said that the industry standard daily rate for the work undertaken by RBA was $300 to $350.

[10]              Notwithstanding the non-payment of invoices in 2023, RBA continued to supply services to Arcanist in 2024. The 2024 invoices issued by RBA to Arcanist were paid. Relevantly, those invoices showed a daily rate charge of $400 per day.

Submissions

Plaintiff’s submissions

[11]              Mr Pascariu, counsel for RBA, submitted that even if all of the key issues raised by Arcanist are taken into account (in other words, discounted from the debt due to RBA) when assessing whether there is a debt due, on Arcanist’s own evidence there is still money owed by Arcanist to RBA. On that basis, Mr Pascariu said that there is no doubt that RBA is a creditor.

[12]              However, this discounting approach was not a concession by the plaintiff that in its submission, Arcanist has no real basis for disputing the debt. In relation to the amounts claimed in the 2023 invoices, Mr Pascariu said that this was addressed by Mr Bryan’s evidence:

(a)Mr Bryan said that the daily rates were specifically discussed and agreed in advance by Mr Spiller, who was aware of the scope of the work and the need for multiple roles.

(b)Mr Bryan also said that a payment of $31,392.95 made by Arcanist towards the 2023 invoices was unconditional, confirming that the applicable rates and days worked were accepted.

(c)He also noted that no invoice was rejected and that the suggestion of over-charging only arose after the statutory demand was issued. He referred to correspondence in 2024 with Mr Spiller as to the total outstanding debt, and that no allegation as to over-charging had been raised at that time (the daily rates in the 2023 invoices were $400 per day for “A/V production”, $1,000 per day for “PCS Broadcast”, and

$500 per day for PCS Broadcast Rehearsal/Testing (on 31 August 2023), plus GST. By way of comparison, the daily rate in the 2022 invoices was $300 per day. The daily rate in 2024 invoices was $400 per day).

[13]              Mr Pascariu also submitted that Arcanist is insolvent, with reference to the 31 March 2024 financial records placed into evidence. Further, he said that there was no basis for me to exercise my discretion to decline to place the company into liquidation.

Defendant’s submissions

[14]              Mr Duckworth, counsel for Arcanist, said that there was good evidence that the 2023 invoices issued by RBA were excessive. He said that the industry standard daily rate was $300–$350, not $400 or $1,000. Mr Spiller’s evidence was that there was not a daily rate agreed for this project, but instead a monthly contractual rate of $7,500 for the months for which invoices were issued, plus a profit share arrangement arising from a joint venture entered into by Arcanist and a third party. He says that he paid

$31,392.95.

[15]              In addition, there is evidence from Mr Spiller that some of Arcanist’s equipment was provided to RBA and retained by RBA without agreement. The equipment was valued at $13,100 in the statement of defence and $11,399 in a Police report, which Mr Duckworth says should be set off against any amount said to be owing to RBA. In addition, different computers were supplied to RBA which were sold by it and applied to the debt. Mr Spiller also gives evidence that invoices rendered in 2024 were overpaid by $6,808 and this was received by RBA and applied to the 2023 invoices.

[16]              Taking into account the amounts paid and the amounts to be set off, Mr Duckworth submitted that there is no remaining debt owed to RBA and so a genuine dispute regarding the amount claimed in the statutory demand.

[17]              Finally, Mr Duckworth submitted that Arcanist was solvent, although he acknowledged that the year ending 13 March 2024 accounts relied on in support of that submission were prepared in accordance with information supplied by Mr Spiller. In other words, the accounts had not been audited.

Legal Principles

Presumption of insolvency

[18]              Section 241 of the Act relevantly provides that the court may put a company into liquidation by the appointment of a liquidator if it is satisfied that:

(a)the company is unable to pay its debts; and/or

(b)it is just and equitable that the company be put into liquidation.

[19]              Section 287(a) of the Act provides that, unless the contrary is proved, a company is presumed to be unable to pay its debts if it has failed to comply with a statutory demand. Once the presumption of insolvency arises, the onus shifts to the debtor to rebut that presumption.2

Disputed debts

[20]              The Court has the power to consider disputed debts in the context of an opposed application for liquidation.3 The relevant principles were summarised in South Waikato Precision Engineering Ltd v Ahu Developments Ltd:4

(a)A winding up order will not be made where there is a genuine and substantial dispute as to the existence of a debt such that it would be an abuse of the process of the Court to order a winding up.

(b)In such circumstances, the dispute, if genuine and substantially disputed, should be resolved through action commenced in the ordinary way and not in the Companies Court.

(c)The assessment of whether there is a genuine and substantial dispute is made on the material before the Court at the time and not on the

2      Yan v Mainzeal Property and Construction Ltd (in rec and in liq) [2014] NZCA 190 [Mainzeal] at [21].

3      Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297 (CA) at 299.

4      South Waikato Precision Engineering Ltd v Ahu Developments Ltd HC Auckland CIV-2008-404- 970, 10 December 2008 at [22], endorsed by the Court of Appeal in Mainzeal, above n 2, at [61].

hypothesis that some other material, which has not been produced might, nonetheless be available.

(d)The governing consideration is whether proceeding with an application savours of unfairness or undue pressure.

[21]              A company is not prevented from showing that indebtedness is disputed even if it has failed to apply to set aside a statutory demand under s 290 of the Act.5 However, the mere assertion of a dispute is not sufficient to rebut the presumption.6 Cogent evidence, short of actual proof that the debt is not payable, is required.7

Set-off

[22]              In Covington Railways Ltd v Uni-Accommodation Ltd, the Court of Appeal acknowledged that a company which is the subject of a liquidation application may be able to show that it has a claim against the creditor which reduces the net balance owing to the creditor or even offsets it altogether.8 Where both sums were liquidated, the Court explained that a simple arithmetical exercise was involved. Where, however, the company subject to the liquidation proceeding relies upon an unliquidated sum for set-off—with liability and/or quantum in dispute—then:9

... in order to impeach the statutory demand and overcome the presumption in s 287(a) that the company is unable to pay its debts when it has failed to comply with the demand, it must be able to do more than merely assert that there is an available set-off. It must be able to point to evidence before the Court showing that it has a real basis for the claimed set-off and that accordingly the applicant's claim to be a creditor is, to the extent of the set- off, seriously in doubt.

Discussion

[23]              Adopting the approach proposed by Associate Judge Bell in Cable Price, the matters I must consider are as follows:10

5      Mainzeal, above n 2, at [63].

6 At [63].

7      Link Electrosystems Ltd v GPC Electronics (NZ) Ltd [2007) NZCA 501 at [16]–[17].

8      Covington Railways ltd v Uni-Accommodation Ltd [2001] 1 NZLR 272 (CA) at [11].

9 At [11].

10     Cable Price (NZ) Ltd v Taimona Haulage Ltd [2016] NZHC 828 at [2].

(a)Is RBA a creditor of Arcanist?

(b)Is Arcanist solvent?

(c)If RBA is a creditor and Arcanist is insolvent, is there any reason why I should exercise my discretion to not place Arcanist into liquidation?

Is RBA a creditor of Arcanist?

[24]RBA’s statutory demand was in relation to eight invoices:

Invoice no	Date	Amount (inc GST)
RBA048	28/03/2022	$10,268.72
RBA050	31/05/2022	$7,590.00
RBA060	20/01/2023	$13,800.00
RBA061	20/02/2023	$23,000.00
RBA062	20/03/2023	$31,921.49
RBA063	20/04/2023	$13,800.00
RBA065	31/07/2023	$16,100.00
RBA067	31/08/2023	$17,250.00
Total	$133,729.72

2022 Invoices

[25]              During submissions, it became apparent that there was no evidence as to a reason for non-payment of the two invoices issued by RBA in March 2022 for

$10,268.72 and May 2022 for $7,590.00 respectively. Mr Duckworth explained that Mr Spiller’s evidence in relation to the two 2022 invoices was that they related to another project, “the Matchfix”. There was no evidence that work relating to “the Matchfix” was not payable. Both invoices applied a daily rate of $300, which is within the range that Mr Spiller says is the industry standard. On that basis, RBA is a creditor for $17,858.72 in relation to these invoices.

2023 Invoices

[26]              As for the 2023 invoices, there is no dispute that RBA provided services to Arcanist for that period. There is also no dispute that RBA was entitled to issue the 2023 invoices. Finally, there was no evidence challenging the number of days worked by RBA (which was detailed in each invoice), so the issue was as to the daily rate charged.

[27]              Mr Spiller put into evidence excerpts from text exchanges between the parties in support of its position that the daily rates were never agreed. He says that he raised this at the time with RBA, after the invoices were rendered. He gave affidavit evidence in that regard, but there was no contemporaneous correspondence provided to the court in support of his assertion that agreement had not been reached.

[28]              Mr Spiller’s evidence is that an appropriate industry daily rate in 2023 for that type of work was $300–$350 per day. He said that Arcanist agreed that:

(a)RBA would contract monthly for $7,500 plus GST (the amount set out in the operating budget, which was in evidence);

(b)RBA’s work for the spring season was from 6 February 2023 to 9 April 2023,  and  for  the  summer  season   was  from   30  June  2023  to   9 September 2023; and

(c)Arcanist would enter into a profit share arrangement with RBA in relation to amounts it expected to receive from Guinevere Esports & Entertainment Pty Ltd (Guinevere), an Australian capital raising company, which shared a shareholder with Arcanist.

[29]The six RBA invoices for 2023 total $115,871. Mr Spiller did not dispute that

$35,000 was payable (calculated with reference to the monthly contract rate he said was agreed), but says that this has been paid. The payment he referred to consisted of an amount of $31,392.95, a set-off for computer equipment retained by RBA, and an overpayment made to RBA in 2024.

[30]              Mr Piscariu submitted that there was no objection raised by Arcanist regarding the invoices at the time they were issued by RBA, or in 2024. The issues were instead raised after the statutory demand was served.

[31]              I do not find Mr Spiller’s evidence compelling when he says that the 2023 invoices are disputed on the basis of overcharging. The onus is on Arcanist to provide cogent evidence to support a defence. A mere assertion is insufficient.

[32]              There is no contemporaneous documentary evidence of any objection to the invoices, even though the parties’ directors communicated by messaging. If it was correct that a monthly contractual rate of $7,500 was agreed for the 2023 invoices, then it is implausible that this was not raised immediately upon the rendering of the first invoice in January 2023. Each of the six invoices issued by RBA in 2023 were for an amount in excess of $7,500 (plus GST) per month, which is the amount described in the operating budget and that Mr Spiller said was agreed.

[33]              Mr Spiller put into evidence messages exchanged on 31 January 2023 (after the first 2023 invoice was issued for $13,800) saying that these messages were evidence that rates had not been agreed. However, in those messages, Mr Bryan said “I would like you to consider $1,500 [a] night for my services when it comes to the PCS. Willing to look at lowering it if the team gets bigger but I will be doing multiple jobs to get this working” (emphasis added). At that stage RBA’s first invoice had been issued with daily rates of $400 and $1,000. Therefore, those messages are not evidence that those rates had not been agreed, but rather evidence that a daily rate of more than $1,000 was sought.

[34]              There is also an exchange of messages in November 2024 in which Mr Bryan enquires about cash for payment of the 2023 invoices: “If there’s nothing yet can we start discussing a transfer of some hardware that I might be able to sell on your behalf.” Mr Spiller says “yeah, might able to sell a few PCs”. Mr Bryan says “I’m free tomorrow to pick up some hardware. I just … really need the money.” Mr Bryan later sells a PC for $900 and Mr Spiller says “cool, cash is going direct to you right?”. I find it incongruous that Arcanist would be delivering up hardware to RBA for sale in 2024, and for the proceeds of sale to be applied to the 2023 invoices if those invoices were genuinely disputed by Arcanist in 2023.

[35]              It also lacks plausibility that an entirely different payment arrangement was reached when the basis for invoicing for 2022 and 2024 was by way of a daily rate. There was no dispute that a daily rate of $400 was applicable and paid by Arcanist to RBA in 2024. No other invoices have been provided which were rendered on the basis of a contractual monthly rate.

[36]              Mr Spiller relies on the Operating Budget which has an allowance of $7,500 per month for payment to RBA as evidence of the agreed monthly rate between the parties. Mr Piscariu submitted that a line item in a budget arrangement between Arcanist and Riot did not support the submission that a monthly contractual rate was agreed between Arcanist and RBA. Mr Piscariu submitted that the fact that the budget was broken down into monthly components was irrelevant, as the budget equally allowed for expenses on a monthly basis; instead it was the total sums which were informative. He submitted that the budget allowed for a total $90,000 to be paid to RBA for the project, which is consistent with the amount that remained owing to RBA in 2024.

[37]              The evidence as to the profit share arrangement is also unclear and unpersuasive. There was a written document in evidence described as a “Joint Venture Agreement” between Arcanist and Guinevere. It is apparent that this document was prepared after the fact, because it stated:

Term & Termination

This agreement commenced on February 1st and remained in effect for one (1) year.

Arcanist terminated the Agreement following lack of payment and opted to work with a Riot provide [sic] budget for the 2024 year.

[38]              This is, at best, evidence of an arrangement between Arcanist and Guinevere, not a profit share arrangement between Arcanist and RBA. There is one reference to RBA in the document, which says that “on camera talent was arranged directly by the Showrunner, [Mr] Bryan”. This does not advance matters.

[39]              On that basis, I conclude that there is no real dispute raised regarding the 2023 invoices being due and payable by Arcanist to RBA in the amount of $115,871.

[40]              I now consider whether there are any amounts to be set off. Unfortunately, there was no clear evidence from either party regarding some matters:

(a)Arcanist says it paid RBA $31,392.95 in relation to the 2023 invoices. RBA does not deny this, and says that this payment was evidence that

the invoices were not disputed. It was not made clear to me whether this payment was for additional invoices rendered in 2023, or in relation to the invoices claimed in the statutory demand. In circumstances, where there is no evidence as to additional invoices issued in 2023, I am concluding that this amount is to be deducted from the debt claimed. This approach is also consistent with some text exchanges in Mr Bryan’s evidence which he says evidence that the parties agreed that

$83,700 was owing to RBA as at 15 January 2024.

(b)There is evidence from RBA regarding a PC being sold for $900 and being applied to debt. Again, in the absence of evidence to the contrary, I am concluding that this amount is to be deducted from the debt claimed.

(c)Mr Spiller gave evidence that he overpaid invoices rendered by RBA in 2024 in the amount of $6,808 and that this was applied to debt owed. Mr Bryan did not deny this in his reply evidence. Again, I am concluding that this amount is to be deducted from the debt claimed.

(d)Finally, there were the allegations that computer equipment was taken and retained by RBA without agreement. There is an exchange of correspondence between the parties after a Police complaint was made by Arcanist. For the purposes of this decision, I will take the purported value of $11,399 contained in the Police report and deduct it from the 2023 invoice amounts.   That is because Mr Bryan, in an email to    Mr Spiller, said after stating that Mr Spiller had the camera, that “in the Police report you also listed items that you’d given me in the past for service and work.” While it is not clear that this related to the 2023 invoices, there is no evidence to the contrary either.

[41]In conclusion, RBA is a creditor in the amount of $83,229.77, comprising:

(a)$17,858.72 in relation to the 2022 invoices; and

(b)$65,371.05 in relation to the 2023 invoices, being $115,871 less the total amounts deducted above.

Is Arcanist insolvent?

[42]              The evidence as to solvency consisted of financial accounts provided for the year ending 31 March 2024. No evidence was provided as to the solvency of Arcanist from 1 April 2024 until the date of the hearing.

[43]              Arcanist has the evidential burden of establishing solvency, and these accounts do not satisfy that burden:

(a)Given that the accounts are nearly 18 months out of date, they are of little assistance in establishing solvency as at the date of the hearing.

(b)They were prepared by accountant on the basis of information provided by Mr Spiller and were not audited. The basis of preparation was described as “… on a Special Purpose basis for taxation and management purposes only.” The accounts further stated that “the Director is solely responsible for the information contained in the special purpose financial statements …”

(c)The accounts show that as at 31 March 2024, Arcanist was balance sheet insolvent. Its net asset position was a loss of $1,349, which does not meet the solvency test.11 A nominal tax loss was stated to carry forward to the next financial year.

(d)In 2023 (the year in which the majority of the debt arose) Arcanist had negative cashflow and made a loss of $135,248.

(e)It is clear that the accounts were not an accurate record as they did not include any actual or contingent liabilities for the amounts in issue in the hearing. For example, the amount of $17,858.72 payable in relation

11     Companies Act, s 4.

to the 2022 invoices is not included. There was also no provision for the amount of $67,052.29 claimed by the three creditors in support, of which Arcanist did not deny that at least two were required to be paid (although it did dispute the amount payable).

[44]              There was also no compelling evidence as to the basis upon which the amounts claimed by the creditors in support were disputed. No application was made to set aside the three statutory demands, so the evidential burden rests on Arcanist.

[45]              Mr Spiller gave some evidence, unsupported by contemporaneous documents. He said that it was accepted that the hourly rates in the invoices were in line with the standard rates for the industry, and that each creditor had worked as a contractor for some years but had not done so since 2025. Mr Spiller also said that in each case, “they were advised that the invoices needed to [be] re-prepared as they exceeded the work that had been done. [They] were aware of this. To date, no amended invoices have ever been sent by them.” In relation to Mr Greene-Young, Arcanist says that all payments to him have been made in full.

[46]              Mr Duckworth submitted that more fulsome evidence was a matter that would be addressed if and when those creditors were substituted.

[47]              However, the question of whether those debts are genuinely disputed goes to solvency. Given the unsubstantiated nature of the disputes raised, and the acceptance that at least some amounts are owing, this is further evidence that Arcanist is unable to meet its debts when they fall due.

[48]              For all of these reasons, Arcanist has not satisfied the onus of establishing solvency.

Exercise of discretion

[49]              Mr Piscariu submitted that there was no basis for the court to exercise its discretion to not place the company into liquidation, Arcanist having not satisfied the

onus of establishing solvency or that there is a dispute that $1,000 or less was owed to RBA. He says there are no factors against appointing liquidators.12

[50]              Mr Duckworth says that if there is an amount that the court says is payable, then the court should specify that debt and give Arcanist a further 21 days to make payment. However, there was no proposal that funds for uncontested amounts be paid into court or a solicitor’s trust account.

[51]              I am not prepared to exercise my discretion to not place the company into liquidation. It is insolvent. There is no real dispute that debts are due and payable. There is evidence that Arcanist has failed to pay debts since 2022, it was selling equipment to pay invoices in 2023, the only evidence before the court shows balance sheet insolvency 18 months ago, and that did not address amounts owed to the RBA in 2022 and the creditors in support. Further, the liquidation is supported by other creditors.

[52]              In those circumstances, the company should be placed into liquidation. If Arcanist is in fact able to repay its debts, despite the evidence to the contrary, it can apply to bring the liquidation to an end in due course.

Result

[53]The defendant company is put into liquidation.

[54]              Jared Waiata Booth and Tony Leonard Maginness are appointed as liquidators. The rates of remuneration of the liquidators and staff working under their supervision and control are fixed at the rates set out in the liquidators’ consent dated 10 June 2025. The liquidators are to apply at the conclusion of the liquidation for approval of their overall remuneration.

[55]              Costs and disbursements are to be paid to the plaintiff on a category 2B basis, together with disbursements as fixed by the Registrar.

12     See Rathmore Properties Ltd v Hawk Properties Ltd [2020] NZHC 323 at [36](f).

[56]These orders are timed at 4:00 pm on 26 September 2025.

Associate Judge Gellert