Ruscoe v McKeown Group Limited - [2015] NZHC 789

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-908 [2015] NZHC 789

UNDER the Companies Act 1993

IN THE MATTER OF

the liquidation of Peninsula Quarries
Limited (in liquidation)

BETWEEN

DAVID IAN RUSCOE AND RICHARD GRANT SIMPSON Applicants

AND

MCKEOWN GROUP LIMITED Respondent

Hearing: 30 March 2015

Appearances:

JWA Johnson and C Webber for Applicants
B Russell and C Mills for Respondent

Judgment:

21 April 2015

JUDGMENT OF MANDER J

[1] The applicants, David Ruscoe and Richard Simpson (the liquidators), are the liquidators of Peninsula Quarries Limited (in liquidation) (PQL). They apply to set aside, as voidable transactions, payments made by PQL to the respondent, McKeown Group Limited (McKeown).1 Alternatively, the liquidators seek recovery of the
payments as transactions at undervalue.2 McKeown opposes these applications on

the basis that the statutory prerequisites to set aside the transactions, or recover the payments, are not made out. Alternatively, that such payments were made in good
faith at a time when McKeown had no reason to suspect PQL was insolvent.

1 Companies Act 1993, s 292.
2 Section 297.

RUSCOE & ANOR v MCKEOWN GROUP LIMITED [2015] NZHC 789 [21 April 2015]

Background

[2] In June 2007, McKeown began supplying fuel to a company, Governors Bay Transport Ltd (GBT). A director of that company was Mr Barry Blatchford, who personally guaranteed his company’s obligations to McKeown.

[3] In October 2008, liquidators were appointed to GBT. At that time, McKeown was owed $97,632.60 by GBT for fuel. McKeown was informed by GBT’s liquidators that the money owed by GBT could not be paid until all preferential and secured creditors had been paid in full. It was the intention of GBT’s liquidators, however, to continue to trade the company pending further investigation. McKeown was requested by them to open a separate account against which any further fuel supplies would be recorded and paid for. As a result, McKeown continued to trade
with the liquidators of GBT and supply fuel under the new account.3

[4] In December 2008, the liquidators of GBT sold the business and assets of that company to Mr Blatchford or his nominee. In February 2009, PQL was incorporated. Mr Blatchford and his wife were the directors and shareholders of the company. PQL was nominated as the purchaser of GBT’s business and assets.

[5] In March 2009, McKeown continued to supply fuel. It is McKeown’s position that it had no knowledge that it was now dealing with PQL, and believed it was continuing to trade with GBT which had “traded out of liquidation”. On this basis, McKeown recommenced supplying fuel under the original GBT account.

[6] Between March 2009 and January 2010, PQL made payments totalling

$196,021.39 to McKeown. That sum included payment for fuel supplied over that period, totalling $165,044.51. The remaining $30,976.88 were payments which reduced previous debt owed to McKeown by GBT (as guaranteed by Mr Blatchford) prior to that company’s liquidation (remaining payments).

[7] In November 2010, PQL was placed into liquidation.

3 McKeown states that in 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.

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Details

Case: [2015] NZHC 789
Decision Date: 21 April 2015

CaseChat Overview and Summary

The applicants, David Ian Ruscoe and Richard Grant Simpson, as liquidators of Peninsula Quarries Limited (PQL), sought to set aside or recover as transactions at undervalue, payments made by PQL to McKeown Group Limited (McKeown). McKeown opposed the applications, arguing that the statutory prerequisites for setting aside the transactions, or recovering the payments, were not made out. Alternatively, McKeown claimed that the payments were made in good faith and there was no reason to suspect PQL was insolvent. The court found that the remaining payments were not voidable transactions under s 292 of the Companies Act 1993. The court further found that the transactions were at undervalue under s 297 of the Act. The court rejected McKeown's defence under s 296(3) of the Act, finding that McKeown did not act in good faith when it received the remaining payments. The court ordered McKeown to pay $30,976.88 to the liquidators. The liquidators were not awarded interest, and the parties were directed to file memoranda addressing outstanding costs issues.

Orders