| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA568/2017 [2018] NZCA 358 |
| BETWEEN | ROBT. JONES HOLDINGS LIMITED |
| AND | ANTHONY JOHN MCCULLAGH AND STEPHEN MARK LAWRENCE |
| Hearing: | 26 April 2018 |
Court: | Cooper, Winkelmann and Williams JJ |
Counsel: | D G Chesterman for Appellant |
Judgment: | 10 September 2018 at 2.30 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellant must pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.
____________________________________________________________________
REASONS OF THE COURT
(Given by Winkelmann J)
Table of Contents
Para No
| Introduction | [1] |
| Background | [4] |
| The entities and people | [4] |
| The transactions | [7] |
| The voidable transaction proceedings | [10] |
| Legislative framework | [12] |
| First ground of appeal: did the liquidators prove the payments by Columbus were a redirection of licence fees due to Northern Crest? | [18] |
| Background | [21] |
| January 2009 Agreement | [22] |
| November 2009 Agreement | [25] |
| April 2010 Agreement | [31] |
| The Rutherford Agreement | [36] |
| (a) Was the November 2009 Agreement a sham? RJH’s argument on appeal | [38] |
| High Court judgment | [40] |
| Relevant principles | [42] |
| Did the Judge err in dismissing motivation for sham as speculative? | [44] |
| Was the intellectual property illusory? | [46] |
| Did Northern Crest own the intellectual property? | [53] |
| Was the licence fee intended to be paid or recoverable? | [64] |
| (b) If the November 2009 Agreement was not a sham, were these payments transactions of Northern Crest for the purposes of s 292? | [74] |
| The payments | [75] |
| High Court judgment | [76] |
| RJH’s argument on appeal | [81] |
| Should the Judge have relied on the MYOB records? | [82] |
| What did the MYOB records and other evidence prove in connection with the payments? | |
| Payments prior to 1 April 2010 | [91] |
| Payments after 1 April 2010 | [101] |
| Analysis | [106] |
| (c) Final observation regarding Columbus payments | [107] |
| Second ground of appeal: did the Judge err in finding that payments to RJH by MSH No 2 were transactions of Northern Crest? | |
| Was there adequate proof the payments were a loan from MSH No 2 to Northern Crest? | [110] |
| RJH’s argument on appeal | [113] |
| Analysis | [115] |
| Were the payments by MSH No 2 made at the direction of, or with the consent of, Northern Crest? | [122] |
| Third ground of appeal: were the payments by MSH No 2 insolvent transactions if they did not diminish the pool of assets available to the creditors? | [125] |
| Analysis | [129] |
| Fourth ground of appeal: relief under s 295 | [146] |
| Result | [150] |
Introduction
In 2010 Robt. Jones Holdings Ltd (RJH) received payments totalling $751,941.52 in discharge of a debt owed to it by Northern Crest Investments Ltd (Northern Crest). The payments were made, not by Northern Crest, but by two other entities: Columbus Property Marketing Pty Ltd (Columbus) and MSH No 2 Pty Ltd (MSH No 2).
In 2011, Northern Crest was placed in liquidation. Its liquidators applied under s 294 of the Companies Act 1993 to set aside the…
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Details
- Case
- [2018] NZCA 358
- Decision Date
CaseChat Overview and Summary
In the case of Robt Jones Holdings Ltd v McCullagh, the primary issue revolved around the ownership of intellectual property associated with a property investment scheme operated by the Northern Crest group. The dispute was brought before the court by Robt Jones Holdings Ltd (RJH), which sought to establish its ownership of the intellectual property, arguing that it was held by MSH No 2. The case was heard and determined by the Federal Court of Australia.
The key legal issues before the court included determining the actual owner of the intellectual property under various agreements and the implications of these agreements on the ownership claims. RJH contended that despite previous statements by the director of Northern Crest affirming Northern Crest's ownership of the intellectual property, subsequent evidence pointed towards MSH No 2 as the rightful owner. This was based on the fact that MSH No 2 was referred to as the "Licensor" in later agreements, and its intellectual property was sold for $10,000 during administration.
The court examined the documentary evidence, including the various license agreements and statements made by the parties involved. The judge considered the evolution of the agreements over time and the clarity or ambiguity in the language used to describe the ownership of the intellectual property. Ultimately, the court found that the weight of the evidence and the consistency of the earlier agreements supported Northern Crest's claim to the intellectual property. The court also highlighted the lack of a formal transfer of intellectual property rights to MSH No 2 and the subsequent sale of MSH No 2's assets, including its intellectual property, for a nominal sum, as indicative of Northern Crest's continued ownership.
The court's decision confirmed that Northern Crest was the rightful owner of the intellectual property associated with the property investment scheme. The court dismissed RJH's claims and upheld Northern Crest's position, reinforcing the importance of clear contractual language and the need for explicit transfers of intellectual property rights. The final orders of the court reflected this determination, affirming Northern Crest's ownership and rejecting RJH's claims.
The key legal issues before the court included determining the actual owner of the intellectual property under various agreements and the implications of these agreements on the ownership claims. RJH contended that despite previous statements by the director of Northern Crest affirming Northern Crest's ownership of the intellectual property, subsequent evidence pointed towards MSH No 2 as the rightful owner. This was based on the fact that MSH No 2 was referred to as the "Licensor" in later agreements, and its intellectual property was sold for $10,000 during administration.
The court examined the documentary evidence, including the various license agreements and statements made by the parties involved. The judge considered the evolution of the agreements over time and the clarity or ambiguity in the language used to describe the ownership of the intellectual property. Ultimately, the court found that the weight of the evidence and the consistency of the earlier agreements supported Northern Crest's claim to the intellectual property. The court also highlighted the lack of a formal transfer of intellectual property rights to MSH No 2 and the subsequent sale of MSH No 2's assets, including its intellectual property, for a nominal sum, as indicative of Northern Crest's continued ownership.
The court's decision confirmed that Northern Crest was the rightful owner of the intellectual property associated with the property investment scheme. The court dismissed RJH's claims and upheld Northern Crest's position, reinforcing the importance of clear contractual language and the need for explicit transfers of intellectual property rights. The final orders of the court reflected this determination, affirming Northern Crest's ownership and rejecting RJH's claims.
Orders
Orders of the court
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Background
Background to the litigation
It was not in dispute that the Northern Crest group (formally Blue Chip group) operated a particular kind of property investment scheme. There was evidence that properties were sold by the licensee and that payments were made pursuant to the licence agreement, payments which flowed in part to RJH: (a)In January 2010, a financial report prepared by Northern Crest stated under the heading “Revenue”:Revenue on settlements received to date amounts to $211k. In addition we have accrued a further $2.2m which equates to half of the revenue anticipated in the license agreement.(b)In a board memorandum dated 24 February 2010, Mr Eakin wrote:(a) Background Over a number of months, the Board expressed its concern about the delays in property settlements and the consequential impact on Northern Crest’s cash flow. Since November 2009, [Columbus] has settled 33 properties with a significant cashflow impact in favour of [Northern Crest]… … (ii) Debtors [Columbus] has recently advised that [Northern Crest] can expect to receive a minimum of $500,000 from [Columbus] in March, resulting from the release of the security deposit [Columbus] holds with Korda Mentha on the Aqua project. Prior to any additional cash payments from [Columbus], at least $1.6 million will have been received by [Northern Crest] from [Columbus] in the last five months of the financial year. As at the end of the financial year, that would mean [Columbus] had accounted to [Northern Crest] for approximately 46% of the total licence fees accrued of $3.5 million as provided for in the Licence Agreement.(c)In March 2010, Mr Eakin prepared a further report titled “Northern Crest Executive Monthly Report for March 2010.” Under “Performance/Sales”, Mr Eakin wrote:… Under the licence agreement, Columbus is obliged to pay Northern Crest a minimum of $3.5 million for the year ended 31 March 2010 which reflected a component for receiving the licence as well as for sales performance. Up until 31 January 2010 Columbus had paid approximately $730,000 to Northern Crest out of a total accrual of $3,030,000. Columbus has since paid an additional $300,000 to Northern Crest, and they have recently advised that a further $500,000 minimum amount should be received by Northern Crest during March 2010, resulting from forecast net revenue exceeding $900,000 for the same month and the return of the Columbus security deposit of $500,000 from the AQUA development. The balance of the fees owed ($1,970,000) should be paid prior to 31 May 2010. There was therefore ample evidence to satisfy the Judge that the intellectual property did exist. Before Gordon J, RJH advanced the argument that if there was intellectual property, MSH No 2 owned it. On appeal, RJH argues:(a)Although acknowledging that in his 6 June 2011 interview with the liquidators Mr Eakin stated Northern Crest had always owned the intellectual property, RJH relies on the fact that by the time MSH No 2 was placed into administration, Mr Eakin had changed his account. Mr Arnautovic, administrator for MSH No 2, issued a report in which he recorded that “[t]he company’s director has also advised that [MSH No 2] has at all times owned the Intellectual Property for the “[Northern Crest] group”. (b)Mr Lawrence, one of Northern Crest’s liquidators, gave evidence that it was unclear who owned the intellectual property. (c)The assets of MSH No 2, including its intellectual property, were sold by its Administrator for $10,000. (d)While the January 2009 Agreement referred to Northern Crest as the “Master Licensor”, and the November 2009 Agreement described Northern Crest as the “Licensor”, the April 2010 and October 2010 license agreements described MSH No 2 as the “Licensor”.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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